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Tariffs and quotas in a spatial duopoly with a land market

Author

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  • Chao-cheng Mai

    (Sun Yat-Sen Institute for Social Sciences and Philosophy, Academia Sinica, Taipei, Taiwan and Chung-Hua Institution for Economic Research, 75, Chang-Hsing Street Taipei, Taiwan)

  • Shin Kun Peng

    (The Institute of Economics, Academia Sinica, Taipei, Taiwan)

Abstract

This paper develops a spatial duopoly model by taking land consumption and mobile households into consideration and examines the respective effects of a tariff and a quota on an open economy with various price conjectural variations (including LÃschian, H-S and G-O competition). The main conclusions are: (i) The Metzler Paradox does not occur under a tariff but occurs under a quota in LÃschian competition; (ii) The tariff and the quota are completely equivalent under H-S competition if the nature of the quota constraint does not affect the original price conjectures; (iii) If an import equivalent quota induces a change in the domestic producer's strategy from LÃschian (H-S and G-O) competition to the price leadership position, then the quota yields domestic prices which are lower (higher) than those induced by a tariff.

Suggested Citation

  • Chao-cheng Mai & Shin Kun Peng, 2000. "Tariffs and quotas in a spatial duopoly with a land market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 34(2), pages 233-250.
    • Handle: RePEc:spr:anresc:v:34:y:2000:i:2:p:233-250
    Note: Received: December 1998/Accepted: May 1999
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    Cited by:

    1. Takahashi, Takaaki, 2003. "International trade and inefficiency in the location of production," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 134-152, June.

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