Does hidden information make trade liberalization more fragile?

Mathias Herzing ()

Canadian Journal of Economics, 2011, vol. 44, issue 2, 561-579

Abstract: This paper focuses on the impact of hidden information on strategic interaction in the context of trade agreements. In the presence of informational asymmetry it is possible that a tradeoff between liberalization and sustainability of cooperation emerges. It is shown that it may be optimal to agree on a degree of liberalization associated with a strictly positive ex ante probability of deviation occurring. In that case, cooperation will break down in finite time, and the optimal degree of liberalization cannot be applied indefinitely.

JEL-codes: C72 C73 D82 F13 (search for similar items in EconPapers)
Date: 2011
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Journal Article: Does hidden information make trade liberalization more fragile? (2011)
Working Paper: Does Hidden Information Make Trade Liberalization More Fragile? (2010)
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