Available evidence indicates that costs of nontraded services in domestic transportation, wholesaling, and retailing (domestic margins) are higher if a good is shipped in international trade than if it is shipped from domestic producers to domestic consumers. Consequently, domestic margins...

Although the GATT prohibits discriminatory import tariffs, it includes means for circumventing this prohibition. The previous literature uses static models and discriminatory tariffs increase welfare. In a dynamic model, if governments lack the ability to precommit, this is not necessarily true....