Farsighted Stable Sets of Tariff Games
AbstractThis article analyzes the tariff negotiation game between two countries when the countries are sufficiently farsighted. It extends the research of Nakanishi (2000) and Oladi (2005) for the tariff retaliation game in which countries take into account subsequence retaliations that may occur after their own retaliation. We show that when countries are sufficiently farsighted, all farsighted stable sets of the tariff game are singletons, which are Pareto efficient and strictly individually rational tariff profiles. These results hold regardless of whether coalitional deviations are allowed or not.
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Bibliographic InfoPaper provided by Graduate School of Economics and Management, Tohoku University in its series TERG Discussion Papers with number 281.
Length: 18 pages
Date of creation: Apr 2012
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- Shino, Junnosuke & Kawasaki, Ryo, 2012.
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- Nakanishi, Noritsugu, 1999. "Reexamination of the International Export Quota Game through the Theory of Social Situations," Games and Economic Behavior, Elsevier, vol. 27(1), pages 132-152, April.
- Masuda, Takeshi, 2002. "Farsighted stability in average return games," Mathematical Social Sciences, Elsevier, vol. 44(2), pages 169-181, November.
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