In his seminal work on tariff retaliation, Johnson (1953-54) showed that a country will "win" a bilateral "tariff war" if its relative monopoly/monopsony power in world trade is sufficiently large. However, it is unclear from Johnson's analysis and from subsequent research on the subject how...

In his seminal work on tariff retaliation, Johnson (Review of Economic Studies, 21, 1953–1954) showed that a country will “win” a bilateral “tariff war” if its relative monopoly/monopsony power in world trade is sufficiently large. However, it is unclear from Johnson's analysis and...