Broda, Christian; Limão, Nuno; Weinstein, David E. - C.E.P.R. Discussion Papers - 2006
The theoretical debate over whether countries can and should set tariffs in response to export elasticities goes back … in debates over trade policy, there exists no evidence about whether countries actually apply it when setting tariffs. We … systematically set higher tariffs on goods that are supplied inelastically. The result is robust to the inclusion of political …