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Optimal Tariffs in Consistent Conjectural Variations Equilibrium

Stephen J. Turnovsky

NBER Working Paper No. 1872 (Also Reprint No. r0846)
Issued in March 1986
NBER Program(s):The International Trade and Investment Program, The International Finance and Macroeconomics Program

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.

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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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