Optimal Tariffs in Consistent Conjectural Variations Equilibrium

Stephen J Turnovsky

No 1872, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

Date: 1986-03
Note: ITI IFM
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Published as Turnovsky, Stephen J. "Optimal Tariffs in Consistent Conjectural Variations Equilibrium," Journal of International Economics, Vol. 21, No. 3, (November 1986), pp. 301-312.

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Journal Article: Optimal tariffs in consistent conjectural variations equilibrium (1986)
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