Zissimos, Ben - Vanderbilt University Department of Economics - 2009
This paper identifies a new terms-of-trade externality that is exercised through tariff setting. A North-South model of …, to attract imports from the other region. In doing so, all countries in a region exert a negative terms-of-trade … externality on each other, collectively undermining their own terms of trade and welfare. This externality can increase efficiency …