Abstract
This paper examines optimal trade in a market with demand uncertainty, in a duopoly in which a home firm competes with a foreign firm. The home government chooses an import tariff to maximize the revenue. Each firm is a Cournot competitor or a Stackelberg leader. The uncertainty is resolved between the decisions made by the home government and by the firms. We compute the maximum-revenue tariff, the quantities, the prices and the profits in each role of the model. We compare the results obtained in the three different ways of moving on the decision make.
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Acknowledgements
We are grateful to Alberto A. Pinto for a number of very fruitful and useful discussions on this work and for his friendship and encouragement. We thank ESEIG – Instituto Politécnico do Porto, Centro de Matemática da Universidade do Porto and the Programs POCTI and POCI by FCT and Ministério da Ciência, Tecnologia e do Ensino Superior for their financial support.
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Ferreira, F.A., Ferreira, F. (2011). Desirable Role in a Revenue-Maximizing Tariff Model with Uncertainty. In: Nonlinear and Complex Dynamics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-0231-2_21
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DOI: https://doi.org/10.1007/978-1-4614-0231-2_21
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