A game model of ASEAN trade liberalization

Thomas Jackson ()

Open Economies Review, 1991, vol. 2, issue 3, 237-254

Abstract: This paper presents a descriptive game model of economic cooperation in the Association of Southeast Asian Nations (ASEAN). ASEAN's members appear in the game as Bayesian players, who maximize expected national welfare and who revise their expectations on the basis of new information. A payoff matrix is constructed through a comparative historical analysis of the players' perceptions of two different policy alternatives: one to liberalize trade quickly with across-the-board tariff cuts; the other to liberalize trade slowly on a commodity-by-commodity basis. The concept of risk dominance provides a solution to the game that explains why in 1977 ASEAN chose a joint strategy of slow trade liberalization. Payoffs revised on the basis of an analysis of events since 1977 yield a new solution that explains why ASEAN stepped up the pace of liberalization in 1987. The paper concludes with an analysis of implications for the future of trade liberalization in ASEAN, and puts forward a falsifiable hypothesis that trade liberalization within ASEAN may continue to accelerate. Copyright Kluwer Academic Publishers 1991

Keywords: ASEAN; trade; cooperation; international; game; Bayesian (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/BF01886143

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