Voluntary Export Restraints in a Trade Model with Sticky Price: Linear and Nonlinear Feedback Solutions

Quaderni - Working Paper DSE N° 1109

21 Pages Posted: 21 Oct 2017

See all articles by Luca Lambertini

Luca Lambertini

University of Bologna - Department of Economics

Arsen Palestini

University of Bologna - Department of Economics

Date Written: October 19, 2017

Abstract

We revisit the adoption of voluntary export restraints (VERS) in the differential Cournot game with sticky price and intraindustry trade by Dockner and Haug (1991). The analysis relies on linear and nonlinear feedback strategies, to encompass the special cases considered in Fujiwara (2010) and to show that a VER may arise in correspondence of any free trade equilibrium generated by feedback information such that competition is at least as strong as under open-loop rules. This result can be interpreted in the light of the dynamic formulation of conjectural variations due to Dockner (1992).

Keywords: differential games, intraindustry trade, VER, conjectural variations

JEL Classification: C73, D43, F12, L13

Suggested Citation

Lambertini, Luca and Palestini, Arsen, Voluntary Export Restraints in a Trade Model with Sticky Price: Linear and Nonlinear Feedback Solutions (October 19, 2017). Quaderni - Working Paper DSE N° 1109, Available at SSRN: https://ssrn.com/abstract=3056222 or http://dx.doi.org/10.2139/ssrn.3056222

Luca Lambertini (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

Arsen Palestini

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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