We study the stability of trade policy arrangements under two regulatory scenarios, with/without PTAs. Unlike previous papers, we consider an extensive set of trade policy constellations and allow for unlimited farsightedness of negotiating parties. We find global free trade (GFT) to be uniquely...

This paper derives Abreu's (1986) stick-and-carrot strategy optimal penal codes in a partial equilibrium model that has been widely used to examine trade liberalization. Unless the asymmetry between countries is significant, the optimal penal codes take simple form. It is also shown that the...

Trade policies such as tariffs are often featured by the prisoners' dilemma. One country's trade liberalization is vulnerable to the opportunism of another country. This problem is more serious in cases where a country behaving opportunistically can only be punished by the victims. In a trade...

This paper analyses the formation of international environmental agreements (IEAs) under uncertainty, focusing on the role of learning and risk aversion. It bridges two strands of literature: one focused on the role learning for the success of IEA formation when countries are risk neutral and...

This paper proposes a comprehensive perspective on the question of self-enforcing solutions for normal form games. While this question has been widely discussed in the literature, the focus is usually either on strict incentives for players to stay within the proposed solution or on strategic...