Quotas Under Dynamic Bertrand Competition [chapter]

Miyagiwa Kaz, Ohno Yuka
International Trade and Economic Dynamics  
We present a new model of dynamic Bertrand competition, where a quota is treated as an intertemporal constraint rather than as a capacity constraint as is common in the literature. The firm under a quota then can still vary the rates of exports over time provided that its total sales within the period do not exceed the quota. We show that a quota results in higher prices than a tariff of equal imports. We also show that firms never play mixed strategies, which contrasts from the result from a
more » ... e-shot game, in which the only equilibrium under a quota is in mixed strategies. JEL Code: F13
doi:10.1007/978-3-540-78676-4_19 fatcat:ovhjjccvqbds5nbfmic2erucwy