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- Title
Strategic interaction among nations: negotiable and non-negotiable trade barriers.
- Authors
Copeland, Brian R.
- Abstract
Trade policy is modelled as a two-stage game between governments. Governments choose a negotiable trade barrier in the first stage of the game, which is co-operative. The level of this barrier is treated as a binding commitment in the second stage of the game where the non-negotiable trade barrier is chosen non-co-operatively. Hence governments choose trade barriers during negotiations with a view to influencing the equilibrium of the non-cooperative game to follow. This proves to be a convenient framework in which to analyse the idea that trade agreements contain loopholes which can be exploited by protectionist governments. Trade negotiations induce substitution toward less efficient instruments of protection, but are nevertheless welfare-improving as long as the negotiations are relevant (i.e., the negotiable barrier is actually in use), and the two instruments are not perfect substitutes.
- Subjects
INDUSTRIAL policy; COMMERCIAL treaties; NONTARIFF trade barriers
- Publication
Canadian Journal of Economics, 1990, Vol 23, Issue 1, p84
- ISSN
0008-4085
- Publication type
Article
- DOI
10.2307/135521