Local Learning , Trade Policy and Industrial Structure Dynamics ∗
نویسندگان
چکیده
In a small open economy with heterogeneous firms, in which tariffs determine the mass of active firms, free trade optimality depends positively on the level of firm heterogeneity and negatively on transportation/adoption costs. The benefits from temporary protection depend on the level of backwardness: for a given mass of backward firms, the relative gains from protection increase with their quality and decrease with the quality of advanced firms; for given production quality levels, the relative advantage of protection increases with the mass of backward firms. JEL-Classification: D51, D62, F12, F13 Key-words: Production network, Learning externalities, Infant industry
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