A Differential Game Model of Tariff War
AbstractWe present a simple two(-country) by two(-good) differental game model of international trade in which the governments of the two countries play a tariff-setting game. We explicitly derive a unilateral optimum tarifff rate and then a Markov-perfect equilibrium pair of tariff strategies (bilateral optimum tariff strategies) and compare the welfare level of each country among autarchic, free-trade, unilateral and bilateral optimum-tariff equilibria.
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Bibliographic InfoPaper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 111.
Length: 26 pages
Date of creation: Jun 2000
Date of revision:
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Tariff-setting game; Durbale consumption good; Markov-perfect strategies; The rate of time preference;
Other versions of this item:
- D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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"Optimal Control Theory and Static Optimization in Economics,"
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420, Dipartimento Scienze Economiche, Universita' di Bologna.
- Calzolari, Giacomo & Lambertini, Luca, 2007. "Export restraints in a model of trade with capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3822-3842, December.
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