[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ags/queddp/275228.html
   My bibliography  Save this paper

Reexamination of the International Export Quota Game Through the Theory of Social Situations

Author

Listed:
  • Nakanishi, Noritsugu
Abstract
It is a well-known theorem in international trade that a Nash equilibrium between two countries that set optimal quotas non-cooperatively is the complete elimination of international trade. Yet we know that countries do by quotas on one another and that trade is not eliminated. This paper explores the hypothesis that the discrepancy lies in the weakness of Nash equilibrium concept. Specifically, we agree that the replacement of the Nash equilibrium with Greenberg's (1990) concept of a "standard-of-behavior" yields a much more plausible result. We construct a model of the quota retaliation as an "individual contingent threats situation." We show the existence of what Greenberg calls a "stable standard-of-behavior" and examine its welfare properties. In a static, essentially non-cooperative setting, we show that every stable standard-of-behavior supports at least one Pareto-efficient combination of quotas and vice versa. Free trade can be "rationalized" by a stable standard-of-behavior.

Suggested Citation

  • Nakanishi, Noritsugu, 1995. "Reexamination of the International Export Quota Game Through the Theory of Social Situations," Queen's Institute for Economic Research Discussion Papers 275228, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275228
    DOI: 10.22004/ag.econ.275228
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/275228/files/QUEENS-IER-PAPER-928.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.275228?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hungerford, Thomas L., 1991. "GATT: A cooperative equilibrium in a noncooperative trading regime?," Journal of International Economics, Elsevier, vol. 31(3-4), pages 357-369, November.
    2. Copeland, Brian R., 1989. "Tariffs and quotas : Retaliation and negotiation with two instruments of protection," Journal of International Economics, Elsevier, vol. 26(1-2), pages 179-188, February.
    3. Harry G. Johnson, 1953. "Optimum Tariffs and Retaliation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 142-153.
    4. Brian R. Copeland, 1990. "Strategic Interaction among Nations: Negotiable and Non-negotiable Trade Barriers," Canadian Journal of Economics, Canadian Economics Association, vol. 23(1), pages 84-108, February.
    5. Edward Tower, 1975. "The Optimum Quota and Retaliation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(4), pages 623-630.
    6. Rodriguez, Carlos Alfredo, 1974. "The non-equivalence of tariffs and quotas under retaliation," Journal of International Economics, Elsevier, vol. 4(3), pages 295-298, August.
    7. Mayer, Wolfgang, 1981. "Theoretical Considerations on Negotiated Tariff Adjustments," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 135-153, March.
    8. Tadelis, Steven, 1996. "Pareto Optimality and Optimistic Stability in Repeated Extensive Form Games," Journal of Economic Theory, Elsevier, vol. 69(2), pages 470-489, May.
    9. Csaplar, Wilfrid W, Jr, 1995. "Quota Wars in Conjectural Variations," Review of International Economics, Wiley Blackwell, vol. 3(3), pages 355-365, October.
    10. Raymond Riezman, 2013. "Dynamic tariffs with asymmetric information," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 6, pages 67-83, World Scientific Publishing Co. Pte. Ltd..
    11. Kenneth S. Chan, 1988. "Optimum Trade Policies and Retaliation," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 427-433, May.
    12. Bernhardt, Dan & Enders, Alice, 1989. "Free trade equilibria to multi-country quota games," Journal of International Economics, Elsevier, vol. 27(3-4), pages 319-333, November.
    13. Copeland, Brian R & Tower, Edward & Webb, Michael A, 1989. "On Negotiated Quotas, Tariffs, and Transfers," Oxford Economic Papers, Oxford University Press, vol. 41(4), pages 774-788, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luo, Xiao, 2001. "General systems and [phiv]-stable sets -- a formal analysis of socioeconomic environments," Journal of Mathematical Economics, Elsevier, vol. 36(2), pages 95-109, November.
    2. Xiao Luo & Yi-Chun Chen, 2004. "A Unified Approach to Information, Knowledge, and Stability," Econometric Society 2004 Far Eastern Meetings 472, Econometric Society.
    3. Bloch, Francis & van den Nouweland, Anne, 2021. "Myopic and farsighted stable sets in 2-player strategic-form games," Games and Economic Behavior, Elsevier, vol. 130(C), pages 663-683.
    4. Ryo Kawasaki & Takashi Sato & Shigeo Muto, 2012. "Farsighted Stable Sets of Tariff Games," TERG Discussion Papers 281, Graduate School of Economics and Management, Tohoku University.
    5. Sheng-Chieh Huang & Xiao Luo, 2008. "Stability, sequential rationality, and subgame consistency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 34(2), pages 309-329, February.
    6. Wietze Lise & Richard Tol, 2004. "Attainability of International Environmental Agreements as a Social Situation," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 4(3), pages 253-277, September.
    7. PERJU, Genoveva Elena, 2009. "Retaliatory disagreement point with asymmetric countries. Evidence from European wine sector during enlargement," MPRA Paper 17757, University Library of Munich, Germany, revised 03 Oct 2009.
    8. Xiao Luo, 2009. "On the foundation of stability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 185-201, August.
    9. Kawasaki, Ryo, 2015. "Roth–Postlewaite stability and von Neumann–Morgenstern stability," Journal of Mathematical Economics, Elsevier, vol. 58(C), pages 1-6.
    10. Kawasaki, Ryo & Sato, Takashi & Muto, Shigeo, 2015. "Farsightedly stable tariffs," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 118-124.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551, Elsevier.
    2. Klimenko, Mikhail & Ramey, Garey & Watson, Joel, 2008. "Recurrent trade agreements and the value of external enforcement," Journal of International Economics, Elsevier, vol. 74(2), pages 475-499, March.
    3. Ludema, Rodney D., 2001. "Optimal international trade agreements and dispute settlement procedures," European Journal of Political Economy, Elsevier, vol. 17(2), pages 355-376, June.
    4. Chisik, Richard, 2003. "Gradualism in free trade agreements: a theoretical justification," Journal of International Economics, Elsevier, vol. 59(2), pages 367-397, March.
    5. Gaisford, James D. & Kerr, William A., 1992. "Which Country Loses The Least In A Trade War?," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(3), pages 1-26, December.
    6. Tadashi Ito, 2007. "NAFTA and productivity convergence between Mexico and the US," IHEID Working Papers 26-2007, Economics Section, The Graduate Institute of International Studies, revised 27 Nov 2007.
    7. David J. Kuenzel, 2023. "Non‐tariff measures: What's tariffs got to do with it?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 133-163, February.
    8. Vanzetti, David & Kennedy, John O.S., 1989. "Optimal Retaliation in International Commodity Markets," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 57(01-02-03), pages 1-25, December.
    9. Francois, Joseph & Bekkers, Eddy & Nelson, Doug R & Rojas-Romagosa, Hugo, 2019. "Trade Wars: Nobody Expects the Spanish Inquisition," CEPR Discussion Papers 14079, C.E.P.R. Discussion Papers.
    10. Josh Ederington, 2001. "Environmental Duties and International Harmonization of Standards," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 418-432, October.
    11. Catherine L. Mann, 1987. "Protection and Retaliation: Changing the "Rules of the Game"," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1), pages 311-335.
    12. Lee, Gea M., 2007. "Trade agreements with domestic policies as disguised protection," Journal of International Economics, Elsevier, vol. 71(1), pages 241-259, March.
    13. Antoine Bouët, 1989. "Politique tarifaire : le cœur et le nucléolus du jeu interne comme fonction de réaction du jeu externe," Revue Économique, Programme National Persée, vol. 40(5), pages 791-816.
    14. Simon Schropp, Kornel Mahlstein, 2007. "The Optimal Design of Trade Policy Flexibility in the WTO," IHEID Working Papers 27-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    15. Bagwell, Kyle & Staiger, Robert W, 1990. "A Theory of Managed Trade," American Economic Review, American Economic Association, vol. 80(4), pages 779-795, September.
    16. Chisik, Richard, 2012. "Trade disputes, quality choice, and economic integration," Journal of International Economics, Elsevier, vol. 88(1), pages 47-61.
    17. Yasuhito Tanaka, 1991. "Negotiated tariffs in free entry oligopoly under integrated markets," Open Economies Review, Springer, vol. 2(2), pages 165-181, June.
    18. Kim, Young-Han, 2004. "The optimal trade bargaining strategies in the negotiation of DDA," Journal of Policy Modeling, Elsevier, vol. 26(1), pages 65-80, January.
    19. Kawasaki, Ryo & Sato, Takashi & Muto, Shigeo, 2015. "Farsightedly stable tariffs," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 118-124.
    20. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.

    More about this item

    Keywords

    Financial Economics;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:queddp:275228. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/qedquca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.