Abstract
This paper analyzes the determination of the optimal tariff under the assumption of consistent conjectural variations (CCV). A general characterization of the CCV equilibrium is given. We show that (i) there are, in general, a multiplicity of each equilibria, and (ii) under certain restrictions, the Cournot equilibrium, which is based on the assumption of no retaliation, can also be a CCV equilibrium. By contrast, free trade is never a CCV equilibrium. Finally, the CCV equilibrium is solved explicitly in a simple example.
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