Abstract
This paper develops a specific-factor variant of the `quality ladders' model without the scale effect property. We analyze the dynamic effects of contingent tariffs that are imposed on imports whenever domestic firms lose their global technological leadership positions to foreign firms. Small `rent-extracting' contingent tariffs do not benefit domestic firms that fall behind and are negatively related to the global rate of technological change in the short run. Large `protective' contingent tariffs allow domestic technological laggards to capture the domestic market and are positively related to the global rate of technological change in the short run.
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