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The Structure and Performance of the World Market in a Cobb-Douglas Example

Author

Listed:
  • Ben Zissimos

    (Department of Economics, Vanderbilt University)

Abstract

In an international trading economy where countries set tariffs strategically, modeled using a Cobb-Douglas example, this paper studies the relationship between the structure and the performance of the world market. Using new results from monotone comparative statics in a Shapley-Shubik market game, replication of such an international trading economy is studied. It is shown that, as the economy is replicated, the equilibrium converges monotonically towards the equilibrium of a competitive equilibrium model of international trade. The distributional implications of replication are also evaluated.

Suggested Citation

  • Ben Zissimos, 2006. "The Structure and Performance of the World Market in a Cobb-Douglas Example," Vanderbilt University Department of Economics Working Papers 0623, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0623
    as

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    File URL: http://www.accessecon.com/pubs/VUECON/vu06-w23.pdf
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    References listed on IDEAS

    as
    1. Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-968, October.
    2. Constantinos Syropoulos, 2002. "Optimum Tariffs and Retaliation Revisited: How Country Size Matters," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 707-727.
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    More about this item

    Keywords

    Efficiency; market structure; market game; tariff war; welfare;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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