Dynamic Trade Policy

Park, Eun-Soo

doi:1997.12.4.561

Journal of Economic Integration 1997 December;12(4) :561-571.
DOI: https://doi.org/10.11130/jei.1997.12.4.561

Dynamic Trade Policy

Eun-Soo Park

West Virginia University

ABSTRACT

This paper considers a dynamic model of strategic export subsidy/tax game in which governments have an option of choosing open-loop or closed-loop trade policies. In a simple two-period Bertrand duopoly model, it is shown that all subgame-perfect equilibria are asymmetric even when the underlying game is symmetric. (JEL Classification: F12, F13)