“Nash-in-Nash” tariff bargaining

Kyle Bagwell, Robert Staiger and Ali Yurukoglu

Journal of International Economics, 2020, vol. 122, issue C

Abstract: We provide an equilibrium analysis of the efficiency properties of simultaneous bilateral tariff negotiations in a three-country model of international trade. We consider the setting in which discriminatory tariffs are allowed, and we utilize the “Nash-in-Nash” solution concept of Horn and Wolinsky (1988). We allow for a general family of political-economic country welfare functions and assess efficiency relative to these welfare functions. We establish a sense in which the resulting tariffs are inefficient and too low, so that excessive liberalization occurs from the perspective of the three countries.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:122:y:2020:i:c:s0022199619300844

DOI: 10.1016/j.jinteco.2019.103263

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