The assumption of the representative household defined as the average of all households is impossible in dynamic models if households are heterogeneous in their time preference rates because, as is well known, the most patient household eventually prevails. Because time preference rates are...

We present a simple two(-country) by two(-good) differental game model of international trade in which the governments of the two countries play a tariff-setting game. We explicitly derive a unilateral optimum tarifff rate and then a Markov-perfect equilibrium pair of tariff strategies...