We consider trade policies intended to affect the production of a foreign monopolist that generates negative externalities. We derive the optimal tariff and optimal import quota and examine which policy measure should be used to maximize domestic welfare. We find that if the domestic government...

To help predict whether the proliferation of free trade agreements (FTAs) continues until global free trade is effectively attained, this paper investigates dynamic paths of FTAs, generated by numerical simulations of a model of an FTA network formation game with many countries. The...

The paper shows that efficient cooperation processes exhibit gradualism when each player does not know the likelihood that the other player exercises a stochastically available outside option. Two players, asymmetrically informed on this likelihood, play an infinitely repeated prisoner's dilemma...