Tariff Policy and Multinational Firms : How to Jump Tariff Jumping

Strategic trade policy affects foreign-based firm's internationalization mode. In this paper, by endogenizing market structure and tariff policy, we claim that 'tariff jumping' is not enough to give a rationale to the existence of multinational enterprises, in absence of cost differentials and 'exportation costs' other than tariffs. Despite this first negative result, we show that the study of the strategic interaction between firms and policy-makers, even in such a simple framework, sheds some light on the relationship between national welfare and MNE's competitive advantages, putting on evidence tariff-policy discontinuities.