Discussion paper

DP5888 Concertina Reforms with International Capital Mobility

We show that the standard concertina result for tariff reforms -- i.e. lowering the highest tariff increases welfare -- no longer holds in general if we allow for international capital mobility. The result can break down if the good whose tariff is lowered is not capital intensive. If the concertina reform lowers welfare it lowers market access as well, thereby compromising a second goal that is typically connected with trade liberalisation.

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Citation

Raimondos, P and U Kreickemeier (2006), ‘DP5888 Concertina Reforms with International Capital Mobility‘, CEPR Discussion Paper No. 5888. CEPR Press, Paris & London. https://cepr.org/publications/dp5888