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MAGKS Joint Discussion Paper Series in Economics, Universität Marburg >
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http://hdl.handle.net/10419/56549
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| Title: | | A theory of dynamic tariff and quota retaliation  |
| Authors: | | Keenan, Donald C. Naqvi, Nadeem Pech, Gerald |
| Issue Date: | | 2011 |
| Series/Report no.: | | Joint discussion paper series in economics 44-2011 |
| Abstract: | | This paper characterizes, under the most general conditions to date, the steady-state equilibria of a symmetric, two-country trade model in which countries move in alternating-move, dynamic either tariffsetting or quota-setting games in Markov Perfect strategies, and compares the respective equilibrium level of tariffs and quotas with the corresponding pairs in the equilibria of static games. Our results imply that the alleged non-equivalence of the outcomes of tariff-retaliation (neither free trade nor autarky) and quota-retaliation (asymptotic autarky) games in the literature depends crucially on complete myopia, and can be dismissed altogether once dynamic considerations are introduced in an operationally significant manner. |
| Subjects: | | foreign trade policy tariff quota retaliation dynamic game Markov perfect equilibrium supermodular games |
| Document Type: | | Working Paper |
| Appears in Collections: | | MAGKS Joint Discussion Paper Series in Economics, Universität Marburg
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