International Transfers: Strategic Losses and the Blocking of Mutually Advantageous Transfers

Makoto Yano

International Economic Review, 1991, vol. 32, issue 2, 371-82

Abstract: Recent studies indicate the possibility that, in the more-than-two-country model, a coalition may block a competitive equilibrium by means of mutually advantageous transfers among its members. This study demonstrates that even the equilibrium which is to be established after a mutually advantageous transfer may be blocked. In order to form a blocking coalition, a country may take a strategic loss, i.e., give or receive a transfer which reduces its own utility. This provides a possible reason why a country may, not out of benevolence, give or receive a transfer which it knows to reduce its own utility. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1991
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