International duopoly with tariffs

Eric Fisher and Charles A. Wilson

No 308, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

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.

Keywords: Tariff; International trade (search for similar items in EconPapers)
Date: 1987
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Working Paper: International Duopoly with Tariffs (1987)
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