This paper considers a two-country, three-good economy in which one country imposes tariffs on import goods at a uniform rate, while the other country engages in free trade. In such an economy, we examine the welfare effects of changing tariff rates toward differential tariffs from uniform tariffs

This paper examines theoretically the structure of optimal (Nash equilibrium) tariff rates under retaliation in a two-country economy with more than two traded goods. We provide a condition under which the equilibrium tariff rates become uniform in both countries, and explore the ranking of the...