| Abstract: | In a small, open economy with a convex production set, international capital mobility raises the cost of tariff protection on one subset of imports if there are irremovable quotas on another. Given irremovable quotas on one subset of imports, free trade is the optimal policy toward all other imports, with or without international capital mobility. Further, in the scalar case, international capital mobility reduces the optimal implicit excess tariff on the quota-constrained import if an irremovable tariff is in place on the other import. |
