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Sustaining free trade in repeated games without government commitment
Devereux, Michael B.
The paper examines how free trade can be sustained in a repeated tariff game in a simple two-country general equilibrium model. In the standard model, free trade can be sustained by "punishment strategies" with only a mild degree of forward looking behaviour on the part of governments. However, when there are short term factor market rigidities, and governments cannot precommit to an ex-ante optimal tariff, it may be much more difficult to sustain free trade. This is illustrated in two models. Social Sciences and Humanities Research Council of Canada A hard copy is available in UCD Library at GEN 330.08 IR/UNI
Keyword(s): Free trade--Econometric models; Tariff; Equilibrium (Economics)
Publication Date:
Type: Working paper
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): University College Dublin. School of Economics
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:22:19 Last Updated: 2018-10-11 15:43:31