Optimal tariffs in consistent conjectural variations equilibrium
This paper analyzes the determination of the optimal tariff under the assumption of Consistent Conjectural Variations (CCV). A general characterization of the CCV equilibrium is given. We show that (i) there are, in general, a multiplicity of such equilibria, and (ii) under certain restrictions, the Cournot equilibrium, which is based on the assumption of no retaliation can also be a CCV equilibrium. By contrast, free trade is never a CCV equilibrium. Finally the CCV equilibrium is solved explicitly in a simple example.
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- John Laitner, 1980. ""Rational" Duopoly Equilibria," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 641-662.
- Jonathan Eaton & Gene M. Grossman, 1986.
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- Thursby, Marie & Jensen, Richard, 1983. "A conjectural variation approach to strategic tariff equilibria," Journal of International Economics, Elsevier, vol. 14(1-2), pages 145-161, February.
- D. J. Horwell, 1966. "Optimum Tariffs and Tariff Policy," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 147-158. Full references (including those not matched with items on IDEAS)
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