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| Gabriel Felbermayr and Benjamin Jung |
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| ''Unilateral Trade Liberalization in the Melitz Model: A Note'' |
| ( 2012, Vol. 32 No.2 ) |
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| In the two-country Melitz (2003) model, unilateral trade liberalization is often cast as a reduction of iceberg transportation costs and wages are determined by a linear outside sector. We show that welfare results reverse when wages adjust and trade frictions are revenue-generating tariffs. |
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| Keywords: Monopolistic Competition; Heterogeneous Firms;
International Trade; Trade Policy |
JEL: F1 - Trade: General
R1 - General Regional Economics (includes Regional Data) |
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| Manuscript Received : Mar 28 2012 | | Manuscript Accepted : Jun 14 2012 |
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