Does Hidden Information Make Trade Liberalization More Fragile?

Mathias Herzing ()

No 2010:12, Research Papers in Economics from Stockholm University, Department of Economics

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.

Keywords: Trade agreements; repeated games; asymmetric information; trade policy (search for similar items in EconPapers)
JEL-codes: C72 C73 D82 F13 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010-06-24
New Economics Papers: this item is included in nep-cta, nep-gth and nep-reg
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Does hidden information make trade liberalization more fragile? (2011)
Journal Article: Does hidden information make trade liberalization more fragile? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2010_0012

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