Department of Theoretical Economics Research Seminar with Ruslan Bogatyrev, HSE

Dear colleagues,  

Department of Theoretical Economics invites you to attend the research seminar with Ruslan Bogatyrev, HSE

Date: October 06, 2026
Time: 1:00 p.m.
Working language: English
Speaker: Ruslan Bogatyrev, Postgraduate Student and lecturer, Department of Theoretical Economics

The link to the seminar: https://us06web.zoom.us/j/88048322831?pwd=ZSQAEameoEOQ1zq0feCmPgby1I1cNG.1

Meeting ID: 880 4832 2831
Passcode: 734513

Title: Reciprocal Tariffs in Spatially Segmented Markets

Abstract: Can a country gain from reciprocal tariffs while losing some domestic producers at the same time? We study symmetric bilateral tariffs between two economies of different sizes, with heterogeneous production costs and free entry. When firms initially serve both markets, a small tariff reduces welfare in the large economy and lowers global welfare. The small economy can still gain when entry costs satisfy a threshold condition. We also show that there is a nonempty open set of parameters where welfare in the small economy rises even though the mass of firms falls in both economies.

The mechanism separates consumer losses, tariff revenue, and domestic entry. Consumer surplus falls by the same amount per capita in both regions, but the small region collects more tariff revenue per capita because it imports from a larger mass of foreign firms and demands more of each imported variety. When tariff revenues are rebated to consumers, these gains can outweigh consumer-surplus losses despite declining domestic entry. Thus, welfare gains from protection need not imply industrial expansion. Since reciprocal tariffs reduce global welfare, compensation can make their coordinated removal beneficial to both regions.