Trade policy in a Ricardian model with a continuum of goods under nonhomothetic preferences |
| |
Authors: | Joachim Stibora Albert de Vaal |
| |
Affiliation: | 1. School of Economics, Kingston University, Penrhyn Road, Kingston upon Thames, KT1 2EE, UK;2. Nijmegen School of Management, Radboud University Nijmegen, The Netherlands |
| |
Abstract: | We study the effects of trade liberalization in a Ricardian trade model with a continuum of goods and nonhomothetic preferences. Goods are ordered according to priority, and higher-ranked goods are consumed only by richer households. South (North) has a comparative advantage in the lower- (higher-) ranked goods. South's terms-of-trade unambiguously deteriorate as a result of unilaterally reducing its tariffs. North, by contrast, may experience a terms-of-trade gain when liberalizing its trade. It appears that the redistribution of tariff revenue from rich to poor households within each country increases the burden of trade liberalization for poor households. |
| |
Keywords: | F11 |
本文献已被 ScienceDirect 等数据库收录! |
|