本文關心進口國存在中間財市場時，探討最終財貿易自由化的效果。本文發現即使外國最終財廠商尚未因關稅的降低而開始出口至本國時，本國中間財價格即會因關稅的降低而快速下跌，而本國最終財廠商的產量與利潤則反而會因貿易自由化而增加，這與一般的認知有很大的不同。此外，在考慮本國存在中間財市場且市場結構外生之下，本國的最適關稅水準會較沒有中間財市場下來得低。但若本國中間財市場結構係內生決定，則本國政府會在一定範圍內藉提高關稅來保護本國產業；但若本國中間財廠商的固定成本很高，則本國政府反而應將關稅降到比中間財市場結構外生時更低，並讓外國廠商獨占市場。

The effects of trade liberalization on the final product are analyzed when the importing (domestic) country possesses an intermediate goods market. It is assumed the intermediate goods provided by the domestic upstream firm are indispensible for producing the domestic final goods. This paper finds that even though the foreign final-product firm has not yet started exporting goods to the domestic market, the domestic input price may slump quickly because of the tariff reduction. Consequently, the output and profit of the domestic final-product firm will increase due to trade liberalization. This finding contradicts what is commonly believed. In addition, if the home country has an exogenous market structure for intermediate goods, the optimal tariff for the domestic country would be lower than that without an intermediate goods market. However, if the domestic intermediate goods market structure is endogenous, then the domestic government should raise the tariff within a certain range to protect the domestic industry. Yet, if the domestic intermediate good firm has a very high fixed costs, then the domestic government should do the reverse by reducing the tariff to a level that is lower than when the intermediate goods market structure is exogenous and let the foreign firm monopolize the market.