Export restraints in a model of trade with capital accumulation
This paper examines the impact of voluntary export restraints (VERs) in an international duopoly modeled as a differential game. With a Ramsey capital accumulation dynamics, the game admits multiple steady states, and a VER cannot be ‘voluntarily’ employed by the foreign firm in case of Cournot beha...
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| Veröffentlicht in: | Journal of economic dynamics & control 2007-12, Vol.31 (12), p.3822-3842 |
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| container_title | Journal of economic dynamics & control |
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| creator | Calzolari, Giacomo Lambertini, Luca |
| description | This paper examines the impact of voluntary export restraints (VERs) in an international duopoly modeled as a differential game. With a Ramsey capital accumulation dynamics, the game admits multiple steady states, and a VER cannot be ‘voluntarily’ employed by the foreign firm in case of Cournot behavior in demand substitutes. Hence, the dynamic framework confirms the results of the VERs literature with static interaction in output levels. In the case of price behavior, the adoption of an export restraint may increase the profits of both firms if products are substitutes and the steady state is ‘market-driven’. However, contrary to the acquired wisdom based upon the static approach, the dynamic analysis also admits an equilibrium outcome, identified by the Ramsey golden rule, where the incentive to adopt a VER is ruled out, irrespective of whether firms are quantity- or price-setters. |
| doi_str_mv | 10.1016/j.jedc.2006.12.010 |
| format | Article |
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| ispartof | Journal of economic dynamics & control, 2007-12, Vol.31 (12), p.3822-3842 |
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| language | eng |
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| source | RePEc; ScienceDirect Journals (5 years ago - present) |
| subjects | Capital accumulation Differential games Duopoly Economic models Exports Game theory Games Industry Intra-industry trade Studies Trade policy |
| title | Export restraints in a model of trade with capital accumulation |
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