Tariffs and quotas in a spatial duopoly with a land market

Chao-cheng Mai () and Shin-Kun Peng ()
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Chao-cheng Mai: Sun Yat-Sen Institute for Social Sciences and Philosophy, Academia Sinica, Taipei, Taiwan and Chung-Hua Institution for Economic Research, 75, Chang-Hsing Street Taipei, Taiwan

The Annals of Regional Science, 2000, vol. 34, issue 2, 233-250

Abstract: This paper develops a spatial duopoly model by taking land consumption and mobile households into consideration and examines the respective effects of a tariff and a quota on an open economy with various price conjectural variations (including LÃschian, H-S and G-O competition). The main conclusions are: (i) The Metzler Paradox does not occur under a tariff but occurs under a quota in LÃschian competition; (ii) The tariff and the quota are completely equivalent under H-S competition if the nature of the quota constraint does not affect the original price conjectures; (iii) If an import equivalent quota induces a change in the domestic producer's strategy from LÃschian (H-S and G-O) competition to the price leadership position, then the quota yields domestic prices which are lower (higher) than those induced by a tariff.

Date: 2000-07-12
Note: Received: December 1998/Accepted: May 1999
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