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The outcome of a trade war (with import tariffs and export subsidies) between two countries is analysed in a Cournot duopoly and in a Bertrand duopoly with differentiated products. The model allows for asymmetries between the countries in terms of competitiveness. When the two countries are...
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Welfare with the maximum-revenue tariff is compared to free-trade welfare under perfect competition in the case of a large country able to affect its terms of trade; under Cournot duopoly with differentiated products; and under Bertrand duopoly with differentiated products. Under perfect...
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