An Analysis of Welfare Effect of Traditional Tariff (Exogenous) and

Welfare effect of tariff for a small country in the case of traditional tariff (exogenous) compared to free trade would decrease the welfare of the country. This paper has shown that the welfare effect of tariff in case of untraditional tariff (endogenous) can be explained by using the specific factors models (Jones) that fundamentally determined by Cournut- Nash Equilibrium system in contrary to traditional case. A monotonic increase in tariff rate would not decrease welfare of the country and it is not vigorously opposed to free trade. JEL Classification: F13, I30, I38.

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Keywords: Welfare Effect , Small Economy , Exogenous Tariff , Endogenous Tariff