-Consider the static games depicted in Figures 10.3 and 10.4 which summarize in billions of dollars producer and consumer surpluses from alternative export-subsidy strategies by the U.S. and Japan. If the export subsidies are for the benefit of overall national welfare, the Cournot-Nash equilibrium strategy profile is:

Question

Quizplus · Accepted Answer

In a Cournot-Nash equilibrium, each player chooses the best strategy given the strategies chosen by the other players. If export subsidies increase overall national welfare for both the U.S. and Japan, then both countries have an incentive to choose the subsidy strategy, leading to the equilibrium where both apply subsidies.

-Consider the Static Games Depicted in Figures 10