Center for Economic Research, Department of Economics, University of Minnesota
This paper considers tariff policies in a small open economy in
which consumers are spatially distributed. The production technology
of the manufacturing sector is assumed to exhibit increasing returns
to scale, and its product incurs costs in transportation. Examples
are constructed which demonstrate that imposition of an import tariff
on this sector can lead to an improvement in welfare, despite the fact
that a monopoly position is created for some firm in the protected industry,
and even though it incurs higher production costs than do importers.
Porter, R.H., (1982), "Tariff Policies in a Small Open Spatial Economy", Discussion Paper No. 159, Center for Economic Research, Department of Economics, University of Minnesota.
Porter, Robert H..
Tariff Policies in a Small Open Spatial Economy.
Center for Economic Research, Department of Economics, University of Minnesota.
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