| Sumario: | The effects of trade policies under imperfect competition in dynamic contexts are considered. An analysis is provided of an export subsidy game under a dynamic Cournot duopoly by employing a discrete-time Markov equilibrium model of dynamic Cournot duopoly according to Maskin and Tirole (1987). Given a linear demand function, it is demonstrated that under a dynamic duopoly, firms are more sensitive to changes in export subsidies, the equilibrium export subsidy in an export subsidy game is smaller, and the output at the subsidy equilibrium is larger than under a static duopoly. With lower subsidy and higher output, the welfare in countries under a dynamic duopoly is greater than that under a static duopoly.
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