Optimal Tariffs in Consistent Conjectural Variations Equilibrium
NBER Working Paper No. 1872 (Also Reprint No. r0846)
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.
Document Object Identifier (DOI): 10.3386/w1872
Published: Turnovsky, Stephen J. "Optimal Tariffs in Consistent Conjectural Variations Equilibrium," Journal of International Economics, Vol. 21, No. 3, (November 1986), pp. 301-312. citation courtesy of
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