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Negotiated tariffs in free entry oligopoly under integrated markets

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  • Yasuhito Tanaka

Abstract

Using the Nash bargaining approach, this paper analyzes the negotiation of tariffs between two countries in free-entry oligopolies under integrated markets. Employing a symmetric model with linear demand and cost functions, the paper shows that for both countries Pareto-efficient negotiated tariffs are larger than the tariffs at the Nash equilibrium of a non-cooperative tariff game (tariff war) in which each country imposes its optimum tariff. Copyright Kluwer Academic Publishers 1991

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File URL: http://hdl.handle.net/10.1007/BF01886898
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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 2 (1991)
Issue (Month): 2 (June)
Pages: 165-181

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Handle: RePEc:kap:openec:v:2:y:1991:i:2:p:165-181

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Web page: http://www.springerlink.com/link.asp?id=100323

Related research

Keywords: negotiated tariffs; free entry oligopoly; integrated markets;

References

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  1. Copeland, Brian R & Tower, Edward & Webb, Michael A, 1989. "On Negotiated Quotas, Tariffs, and Transfers," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 774-88, October.
  2. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
  3. Mayer, Wolfgang, 1981. "Theoretical Considerations on Negotiated Tariff Adjustments," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 135-53, March.
  4. Markusen, James R. & Venables, Anthony J., 1986. "Trade Policy with Increasing Returns and Imperfect Competition: Contradictory Results from Competing Assumptions," CEPR Discussion Papers 120, C.E.P.R. Discussion Papers.
  5. Krugman, Paul R, 1987. "Is Free Trade Passe?," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 131-44, Fall.
  6. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
  7. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  8. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
  9. Venables, Anthony J., 1985. "Trade and trade policy with imperfect competition: The case of identical products and free entry," Journal of International Economics, Elsevier, vol. 19(1-2), pages 1-19, August.
  10. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
  11. Sutton, John, 1986. "Non-cooperative Bargaining Theory: An Introduction," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 709-24, October.
  12. Chan, Kenneth S., 1988. "Trade negotiations in a Nash bargaining model," Journal of International Economics, Elsevier, vol. 25(3-4), pages 353-363, November.
  13. Horstmann, Ignatius J. & Markusen, James R., 1986. "Up the average cost curve: Inefficient entry and the new protectionism," Journal of International Economics, Elsevier, vol. 20(3-4), pages 225-247, May.
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Cited by:
  1. "Tanaka, Yasuhito", 1993. "Welfare Enhancing Tariff War in Duopoly with Product Differentiation," Economic Review, Hitotsubashi University, vol. 44(1), pages 15-22, January.
  2. Wang, Leonard F.S. & Lee, Jen-Yao, 2012. "Domestic entry, optimum-welfare and maximum-revenue tariffs," Research in Economics, Elsevier, vol. 66(1), pages 106-109.

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