On the equivalence of tariffs and quotas under duopoly: A conjectural variation approach

Abstract

The purpose of this paper is to use a conjectural variation approach to examine the equivalence of tariffs and quotas, set so as to result in the same equilibrium quantity of imports. We have demonstrated that whether tariffs and quotas are equivalent depends crucially upon the particular value of the conjectural variations. Specifically, in the case of equal import tariffs and quotas, the equivalence holds only in the Cournot case; otherwise the domestic price is lower or higher under quotas depending upon whether competition is less or more competitive than Cournot.