CAN THE OPTIMAL TARIFF BE ZERO FOR A GROWING LARGE COUNTRY?

Can the optimal tariff be zero for a growing large country? To pursue possibility, we extend Rivera-Batiz–Romer lab-equipment model of endogenous technological change to include asymmetric countries, import tariffs, and either homogeneous or heterogeneous firms. Each country's domestic revenue share is sufficient statistic its long-run growth rate, but it not welfare. A unilateral reduction by country always increases balanced rate. locally under mild condition, which automatically satisfied at symmetric path with tariff.