Tariffs vs Quotas in a Model of Trade with Capital Accumulation

Giacomo Calzolari () and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: This paper examines the equivalence among price-modifying and quantity fixing international trade policies in a differential game. We employ two well known capital accumulation dynamics for firms, due to Nerlove and Arrow and to Ramsey, respectively. We show that, in both cases, open-loop and closed-loop Nash equilibria coincide. Under the former accumulation the tariff-quota equivalence holds, but it does not under the latter. Moreover, in the Ramsey model, the country setting the trade policy prefers a quantity equivalent import quota to the adoption of the tariff.

Date: 2000
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Tariffs vs Quotas in a Model of Trade with Capital Accumulation* (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:392

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