@techreport{NBERw17521,
 title = "The Simple Analytics of the Melitz Model in a Small Open Economy",
 author = "Svetlana Demidova and Andrés Rodríguez-Clarez",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "17521",
 year = "2011",
 month = "October",
 URL = "http://www.nber.org/papers/w17521",
 abstract = {In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure. We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country. This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare.},
}