Strategic Trade Policy under Incomplete Information

Giovanni Maggi

International Economic Review, 1999, vol. 40, issue 3, 571-94

Abstract: This paper examines equilibrium trade policies when firms have better information than governments about the profitability of the industry. Contrary to the intuition that the policymakers' lack of information should reduce their incentives to engage in strategic trade intervention, the analysis suggests that information asymmetries may increase trade policy distortions in equilibrium and ultimately worsen the "prisoners dilemma" between governments. Copyright 1999 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1999
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Working Paper: Strategic Trade Policy Under Incomplete Information (1997)
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