Bilateral Quota Wars

Constantinos Syropoulos (), Elias Dinopoulos and Mordechai Kreinin

Canadian Journal of Economics, 1995, vol. 28, issue 4a, 939-44

Abstract: In this paper, the authors employ a three-country, two-good, general equilibrium model to analyze bilateral quota wars. It is shown that the presence of a third country or a number of countries that trade freely leads to fundamentally different results of retaliation: bilateral quota wars need not eliminate either multilateral or bilateral trade flows. This result generates several interesting implications for the ranking of policy instruments and the likelihood of winning trade wars.

Date: 1995
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