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Title: Strategic Trade Between Two Countries - Exploring the Case of Partial Local Consumer Protection
Authors: Iordanov, Iordan
Vassilev, Andrey
Keywords: Trade Models
Nash Equilibrium
Difference Equations
Issue Date: 2017
Publisher: Institute of Mathematics and Informatics Bulgarian Academy of Sciences
Citation: Serdica Journal of Computing, Vol. 11, No 1, (2017), 031p-043p
Abstract: The paper develops a dynamic model of trade between two countries where the trading entities interact in a strategic context. Consumers in both countries are endowed with certain incomes and try to acquire as much as possible of the quantities available on the markets. Consumers have privileged access to some of the good supplied locally, a form of partial local protection. Over time, prices are adjusted to respond to the outcomes of trading. For this setup, we prove the existence of Nash equilibria and simulate the model numerically in Python to illustrate the possibility of obtaining different types of price dynamics depending on the price adjustment rule used. ACM Computing Classification System (1998): J4, G4, I.6.3.
ISSN: 1312-6555
Appears in Collections:Volume 11 Number 1

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