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Bryan McCannon
''The impact of a trade embargo on quality''
( 2004, Vol. 6 No.14 )
A trade embargo is a common way to punish a country. The question I ask is what effect does an embargo have on an imperfectly competitive market? I extend the standard quality duopoly model to show that if the embargo is on the high quality good the quality diminishes and causes an ambiguous effect on prices. An embargo on the low quality good raises the quality of the better good and increases both firm's price.
Keywords: punishment
JEL: F1 - Trade: General
L5 - Regulation and Industrial Policy: General
Manuscript Received : Sep 01 2004 Manuscript Accepted : Sep 12 2004

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