IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/17757.html
   My bibliography  Save this paper

Retaliatory disagreement point with asymmetric countries. Evidence from European wine sector during enlargement

Author

Listed:
  • PERJU, Genoveva Elena

Abstract

The vector space model facilitates a very useful representation of the strategic interaction in trade because it is possible to incorporate both symmetric and asymmetric features of the players. This paper characterizes the Nash solution of the non-cooperative international trade game in the orthogonal vector space. We have used the standard properties of the Nash solution to determine if the non-cooperative action-reaction trade policy space should be written in terms of 'import-import' or 'import-export' quotas as strongest punishment. The trade policy space defined by import-export' quotas is not a Nash solution of the non-cooperative game but an improvement in the disagreement set. We show the positive correlation between import and export quotas using data on trade relations between EU-15, Romania, Hungary and Bulgaria for wine sector during 1995-2005. In our model the outcome of the non-cooperative trade is autarky. Retaliation is played when countries restrict their imports to one third of the national optimum.

Suggested Citation

  • PERJU, Genoveva Elena, 2009. "Retaliatory disagreement point with asymmetric countries. Evidence from European wine sector during enlargement," MPRA Paper 17757, University Library of Munich, Germany, revised 03 Oct 2009.
  • Handle: RePEc:pra:mprapa:17757
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/17757/1/MPRA_paper_17757.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Harvey Lapan & Jean‐Philippe Gervais, 2004. "The Nonequivalence of Import and Export Quotas in Strategic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 130-137, February.
    2. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-160, February.
    3. Edward Tower, 1975. "The Optimum Quota and Retaliation," Review of Economic Studies, Oxford University Press, vol. 42(4), pages 623-630.
    4. 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.
    5. Cowell, Frank A., 2006. "Microeconomics: Principles and Analysis," OUP Catalogue, Oxford University Press, number 9780199267774.
    6. Olivier Cadot & Jaime De Melo & Marcelo Olarreaga, 2002. "Harmonizing External Quotas in an FTA: A Step Backward?," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 259-282, November.
    7. Constantinos Syropoulos & Elias Dinopoulos & Mordechai E. Kreinin, 1995. "Bilateral Quota Wars," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 939-944, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petr Koráb, 2012. "European wine policy and perceptions of Moravian winemakers: a pilot study in the Czech Republic," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 60(4), pages 207-214.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kishore Gawande, 1997. "A Test of a Theory of Strategically Retaliatory Trade Barriers," Southern Economic Journal, John Wiley & Sons, vol. 64(2), pages 425-449, October.
    2. Ryo Kawasaki & Takashi Sato & Shigeo Muto, 2012. "Farsighted Stable Sets of Tariff Games," TERG Discussion Papers 281, Graduate School of Economics and Management, Tohoku University.
    3. Kawasaki, Ryo & Sato, Takashi & Muto, Shigeo, 2015. "Farsightedly stable tariffs," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 118-124.
    4. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, University Library of Munich, Germany.
    5. Bin, Sheng, 2000. "The Political Economy of Trade Policy in China," Working Papers 10/2000, Copenhagen Business School, Department of Management, Politics & Philosophy.
    6. Francois, Joseph & Nelson, Douglas & Pelkmans-Balaoing, Annette, 2008. "Endogenous Protection in General Equilibrium: Estimating Political Weights in the EU," CEPR Discussion Papers 6979, C.E.P.R. Discussion Papers.
    7. Aidan Hollis, 2003. "Industrial Concentration, Output, and Trade: An Empirical Exploration," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(2), pages 103-119, March.
    8. Bouet, Antoine & Laborde, David, 2008. "The potential cost of a failed Doha Round," Issue briefs 56, International Food Policy Research Institute (IFPRI).
    9. Takatsuka, Hajime & Zeng, Dao-Zhi, 2016. "Nontariff protection without an outside good," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 65-78.
    10. Jaime de Melo & David Tarr, 2015. "VERs under imperfect competition and foreign direct investment: A case study of the US–Japan auto VER," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 22, pages 461-483, World Scientific Publishing Co. Pte. Ltd..
    11. Paolo Bertoletti & Giorgio Rampa, 2011. "On Marginal Returns and Inferior Inputs," Quaderni di Dipartimento 145, University of Pavia, Department of Economics and Quantitative Methods.
    12. Lorenzo Caliendo & Robert C. Feenstra & John Romalis & Alan M. Taylor, 2015. "Tariff Reductions, Entry, and Welfare: Theory and Evidence for the Last Two Decades," NBER Working Papers 21768, National Bureau of Economic Research, Inc.
    13. Gordon H. Hanson & Antonio Spilimbergo, 2001. "Political economy, sectoral shocks, and border enforcement," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 34(3), pages 612-638, August.
    14. Defever, Fabrice & Imbruno, Michele & Kneller, Richard, 2020. "Trade liberalization, input intermediaries and firm productivity: Evidence from China," Journal of International Economics, Elsevier, vol. 126(C).
    15. Tom Krebs & Pravin Krishna & William Maloney, 2010. "Trade Policy, Income Risk, and Welfare," The Review of Economics and Statistics, MIT Press, vol. 92(3), pages 467-481, August.
    16. Bohara, Alok K. & Camargo, Alejandro Islas & Grijalva, Therese & Gawande, Kishore, 2005. "Fundamental dimensions of U.S. trade policy," Journal of International Economics, Elsevier, vol. 65(1), pages 93-125, January.
    17. Josh Ederington & Jenny Minier, 2003. "Is environmental policy a secondary trade barrier? An empirical analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 137-154, February.
    18. Standardi, Gabriele & Cai, Yiyong & Yeh, Sonia, 2017. "Sensitivity of modeling results to technological and regional details: The case of Italy's carbon mitigation policy," Energy Economics, Elsevier, vol. 63(C), pages 116-128.
    19. Giovanni Facchini & Johannes Van Biesebroeck & Gerald Willmann, 2006. "Protection for sale with imperfect rent capturing," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 845-873, August.
    20. Zissimos, Ben, 2009. "Optimum tariffs and retaliation: How country numbers matter," Journal of International Economics, Elsevier, vol. 78(2), pages 276-286, July.

    More about this item

    Keywords

    asymmetries; quotas; non-cooperative game; disagreement points; Nash solution;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:17757. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.