Recommended readings (Machine generated): Bagwell, K. and R.W. Staiger (1999), 'An Economic Theory of GATT', American … the Theory of Optimum Subsidy', Journal of Political Economy, 71 (1), February, 44-50 -- Harry G. Johnson (1965), 'Optimal … Directions in Trade Theory, Chapter 10, Ann Arbor, MI: University of Michigan Press, 347-84 -- Douglas A. Irwin and Nina Pavcnik …