Optimal Tariffs in Consistent Conjectural Variations Equilibrium
Stephen J. Turnovsky
University of Washington - Institute for Economic Research; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
NBER Working Paper No. w1872
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.
Number of Pages in PDF File: 17working papers series
Date posted: June 22, 2004
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.515 seconds