Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/56549 
Year of Publication: 
2011
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 44-2011
Publisher: 
Philipps-University Marburg, Faculty of Business Administration and Economics, Marburg
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

Files in This Item:
File
Size
644.72 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.