Commercial Policy in a Predatory World

James Anderson ()

No 703, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Predation---extortion or theft---imposes significant endogenous costs on trade, with rich implications for trade policy. The model of this paper shows that the response of trade to liberalization depends on the strength of enforcement against predators. Efficient commercial policy may either tax or subsidize trade. The Mercantilist predilection for trade monopoly and for subsidy has a rationale. Insecurity induces an international externality alternative that of the standard terms of trade effect. Tolerance or intolerance of smuggling can be rational depending on the weakness or strength of enforcement, illustrated by the switch from the former to the latter by Britain in regard to its North American colonies.

Keywords: commercial policy; predation; extortion; theft; trade costs; trade policy (search for similar items in EconPapers)
JEL-codes: F13 O17 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-law
Date: 2008-05-01
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Working Paper: Commercial Policy in a Predatory World (2006)
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