TY - JOUR
T1 - Free trade equilibria to multi-country quota games
AU - Bernhardt, Dan
AU - Enders, Alice
N1 - Funding Information:
*We are grateful for suggestiorbs of the two anonymous referees and the editor of the Journal. Steve Neston improved the paper. The first author acknowledges support from the Social Sciences and Humanities Research Council of Canada. We accept responsibility for any errors which remain.
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 1989/11
Y1 - 1989/11
N2 - We consider a symmetric N-country competitive general equilibrium endowment economy in which countries select quotas in a stsic Nash game to maximize the welfare of representative citizens. Unlike tariffs, quota revenues need not accrue solely to the quota-setting country. The only possible equilibrium outcome, other than autarky, is free trade. Free trade prevails unless the quota-setting country receives a fraction of quota rents greater than (N-1) N. We conclude that the prevelance of binding quotas, in contrast to tariffs, cannot be explained within the accepted rubric in which countries maximize the welfare of representative citizens.
AB - We consider a symmetric N-country competitive general equilibrium endowment economy in which countries select quotas in a stsic Nash game to maximize the welfare of representative citizens. Unlike tariffs, quota revenues need not accrue solely to the quota-setting country. The only possible equilibrium outcome, other than autarky, is free trade. Free trade prevails unless the quota-setting country receives a fraction of quota rents greater than (N-1) N. We conclude that the prevelance of binding quotas, in contrast to tariffs, cannot be explained within the accepted rubric in which countries maximize the welfare of representative citizens.
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U2 - 10.1016/0022-1996(89)90058-5
DO - 10.1016/0022-1996(89)90058-5
M3 - Article
AN - SCOPUS:38249025145
VL - 27
SP - 319
EP - 333
JO - Journal of International Economics
JF - Journal of International Economics
SN - 0022-1996
IS - 3-4
ER -