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Optimal Tariffs in Consistent Conjectural Variations Equilibrium

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  • Stephen J. Turnovsky

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.

Suggested Citation

  • Stephen J. Turnovsky, 1986. "Optimal Tariffs in Consistent Conjectural Variations Equilibrium," NBER Working Papers 1872, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1872
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    1. John Laitner, 1980. ""Rational" Duopoly Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 641-662.
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    Cited by:

    1. Randall Morck & Bernard Yeung & Wayne Yu, 2013. "R-squared and the Economy," NBER Working Papers 19017, National Bureau of Economic Research, Inc.
    2. Holloway, Garth J., 1995. "Conjectural Variations With Fewer Apologies," Working Papers 225880, University of California, Davis, Department of Agricultural and Resource Economics.

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