Strategic Trade Policy under Uncertainty: Sufficient Conditions for the Optimality of Ad Valorem, Specific and Quadratic Trade Taxes.

In most previous work on strategic trade policy, the form of government intervention has been prescribed in advance. In this paper, the authors apply a solution concept discussed by P. D. Klemperer and M. A. Meyer (1989) for games in which the strategy space consists of the class of all (non-state-contingent) price quantity schedules. They examine a series of specific assumptions on demand and supply conditions and derive the associated equilibrium trade policies. The authors derive welfare implications for all cases examined. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.