-country symmetric reciprocal dumping model of intra-industry trade with free entry and trade costs. We show that the consumption base … (destination principle) dominates the production base (origin principle) when trade costs are high or demand is linear. For lower … levels of trade costs and nonlinear demand, the welfare ranking of the two tax bases is ambiguous. Hence, there is no clear …

stemming from terms-of-trade improvements and reduced dependence on subsidized and protected industries. The paper also …