A differential game model of tariff war

Authors
Kemp, MC Van Long, N Shimomura, K
Citation
Mc. Kemp et al., A differential game model of tariff war, JPN WORLD E, 13(3), 2001, pp. 279-298
Citations number
6
Categorie Soggetti
Economics
Journal title
JAPAN AND THE WORLD ECONOMY
ISSN journal
09221425 → ACNP
Volume
13
Issue
3
Year of publication
2001
Pages
279 - 298
Database
ISI
SICI code
0922-1425(200108)13:3<279:ADGMOT>2.0.ZU;2-X
Abstract
We present a simple two(-country) by two(-good) differential game model of international trade in which the governments of the two countries play a ta riff-setting game. We explicitly derive a unilateral optimum tariff rate an d then a Markov-perfect equilibrium pair of tariff strategies (bilateral op timum tariff strategies) and compare the welfare level of each country amon g autarchic, free-trade, unilateral and bilateral optimum-tariff equilibria . (C) 2001 Elsevier Science B.V. All rights reserved.