We study the dynamics of optimal trade policy in a model with costly inter-sectoral adjustment of labour, where migrants pay less than the marginal social cost of migration. If workers have rational expectations, a future tariff has an announcement effect on the current migration decision. If...

Optimal distortions for the agricultural sector are calculated taking as given distortions in the nonagricultural sector. The calculations use a general equilibrium model and assume that the sole criterion is economic efficiency. For most agricultural commodities, existing distortions should be...

We analyze a model in which a government uses a second best policy to affect the reallocation of labor, following a change in relative prices. We consider two extreme cases, in which the government has either unlimited or negligible ability to commit to future actions. We explain why the ability...

We model the situation where two large countries impose either tariffs or quotas and a third large country remains passive. The introduction of the third country overturns results from two-country models. Stable quota equilibria are capable of reproducing the equilibrium price under tariffs, and...

Partial cooperation in setting trade policy may be worse than no cooperation for countries who form a customs union. The paper investigates three situations where this is likely to occur. First, if the countries forming the union comprise too small a percentage of the non-competitive sector of...

The effect of risk aversion on Nash equilibrium trade restrictions is studied using numerical methods. An increase in a nation's level of risk aversion can lead to either an increase or decrease in its equilibrium restriction and either an increase or decrease in its rival's restriction. The...