The simple analytics of the melitz model in a small open economy
By: Svetlana Demidova, Andres Rodriguez-Clare
Contributors: Rodríguez-Clare, Andrés; National Bureau of Economic Research
Series: NBER working paper series -- working paper 17521; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17521.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure.  We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country.  This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 1/5/2012.

Includes bibliographical references.

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