Oligopoly Model and Its Applications in International Trade

EasyChair Preprint no. 448

Abstract

Each firm in the oligopoly plays off of each other in order to receive the greatest utility, expressed in the largest profits, for their firm. When analyzing the market, decision makers develop sets of strategies to respond the possible actions of competitive firms. In international stage, firms are competitive and they have different business strategies, their interaction becomes essential because the number of competitors is increased. This paper will provide an examination in international trade balance and public policy under Cournot’s framework. The model shows how the oligopolistic firm can decide the business strategy to maximize its profit given others’ choice, and how the public maker can find out the optimal tariff policy to maximize its social welfare. The discussion in this paper can be significant for both producers in deciding their quantities needed to be sold in not only domestic market but also international stage in order to maximize their profits and governments in deciding the tariff rate on imported goods to maximize their social welfare.

Keyphrases: Cournot model, international trade, Oligopoly, public policy

@Booklet{EasyChair:448,
  author = {Khoi Luu and Trung Nguyen Duc and Luu Xuan Van},
  title = {Oligopoly Model and Its Applications in International Trade},
  howpublished = {EasyChair Preprint no. 448},
  doi = {10.29007/t7tk},
  year = {EasyChair, 2018}}