The importance of fixed costs in the design of trade policiesAn exercise in the theory of second best

1. Luis Corchón Díaz
2. Miguel González-Maestre

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Abstract

In this paper we study the optimal trade policy in an oligopolistic market with a given number of quantity-setter firms. It is shown that under no fixed costs, the optimal trade policy displays certain characteristics but under fixed costs most of these characteristics no Longer hold.

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