A Win–Win–Win Tariff–Tax Reform under Imperfect Competition

Taking into account non‐constant marginal costs, this paper considers the effects of a tariff cut combined with a consumption tax increase on welfare, government revenue, and market access. We show that welfare, government revenue, and market access can all improve with this policy reform under decreasing marginal costs. This result may provide a theoretical rationale for the above policy reform, which is guided by the International Monetary Fund and the World Bank.