Scandinavian Working Papers in Economics
Research Papers in Economics,
Stockholm University, Department of Economics
No 2010:12: Does Hidden Information Make Trade Liberalization More Fragile?
Mathias Herzing ()
Additional contact information
Mathias Herzing: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
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
35 pages, June 24, 2010
Full text files
wp10_12.pdf
Questions (including download problems) about the papers in this series should be directed to Anne Jensen ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2024-02-05 17:13:48.