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Quotas Under Dynamic Bertrand Competition
[chapter]
International Trade and Economic Dynamics
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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
doi:10.1007/978-3-540-78676-4_19
fatcat:ovhjjccvqbds5nbfmic2erucwy