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International duopoly with tariffs

Author

Listed:
  • Eric Fisher
  • Charles A. Wilson

Abstract

This paper analyzes the effects of a tariff on price-setting duopolists who cannot segment geographically distinct markets; hence, commercial policy has effects in domestic and foreign markets. Although each firm's payoff function is discontinuous, there is a unique equilibrium for an arbitrary tariff. We find that a tariff serves to increase the profits of both the domestic and foreign producer. Moreover, the profits of both firms rise monotonically with the tariff.

Suggested Citation

  • Eric Fisher & Charles A. Wilson, 1987. "International duopoly with tariffs," International Finance Discussion Papers 308, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:308
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    File URL: http://www.federalreserve.gov/pubs/ifdp/1987/308/default.htm
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    File URL: http://www.federalreserve.gov/pubs/ifdp/1987/308/ifdp308.pdf
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    References listed on IDEAS

    as
    1. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    2. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, vol. 26(3-4), pages 251-270, May.
    3. Partha Dasgupta & Eric Maskin, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, II: Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(1), pages 27-41.
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    Cited by:

    1. Anderson, Simon P. & Schmitt, Nicolas & Thisse, Jacques-Francois, 1995. "Who benefits from antidumping legislation?," Journal of International Economics, Elsevier, vol. 38(3-4), pages 321-337, May.

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    Keywords

    Tariff; International trade;

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