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When governments choose trade policy, rarely do they have complete information, At the time decisions are made, policy makers have only estimates of market responses, as well as the responses of foreign governments. In many realistic situations, even the policy objectives of other governments...
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This paper studies the role of transfers among groups within a country as well as among countries in a two level game of international trade negotiations. We show that in order to realize the intended transfer in the presence of asymmetric information on the states of recipients (and donors), a...
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bindings (i.e., precise tariff levels). Consistent with practice, the theory also predicts that governments sometimes apply …-optimal tariff, in order to conceal weakness. It also suggests a new information-based theory of gradualism in trade agreements …
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