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Trade Wars, Trade Negotiations and Applied Game Theory

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  • Harrison, Glenn W
  • Rutstrom, E E

Abstract

The authors propose a methodological extension of quantitative "cost of protection" analyses to consider elementary game-theoretic aspects of the policy process. They illustrate these ideas by evaluating size propositions: nations can "win" trade wars; multilateral negotiations that "merely preserve the status quo" have some value; the terms of the U.S.-Canada free trade agreement can be strategically rationalized; threat points matter in trade negotiations; the negotiating practice of comparing the "value" of one country's concessions with another can dramatically influence bargaining outcomes; and that the substance of multilateral negotiations can be achieved by bilateral negotiations between the bigger countries. Copyright 1991 by Royal Economic Society.

Suggested Citation

  • Harrison, Glenn W & Rutstrom, E E, 1991. "Trade Wars, Trade Negotiations and Applied Game Theory," Economic Journal, Royal Economic Society, vol. 101(406), pages 420-435, May.
    • Handle: RePEc:ecj:econjl:v:101:y:1991:i:406:p:420-35
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    Citations

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    Cited by:

    1. Rutstrom, E. Elisabet & Redmond, Willie J., 1997. "A quantification of lobbying benefits with an application to the common agricultural policy," Journal of Policy Modeling, Elsevier, vol. 19(6), pages 635-659, December.
    2. Runge, C. Ford, 1992. "Environmental Effects Of Trade In The Agricultural Sector: A Case Study," Working Papers 14449, University of Minnesota, Center for International Food and Agricultural Policy.
    3. Jaime de Melo & David Tarr, 2015. "VERs under imperfect competition and foreign direct investment: A case study of the US–Japan auto VER," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 22, pages 461-483, World Scientific Publishing Co. Pte. Ltd..
    4. Harrison, Glenn W. & Martínez-Correa, Jimmy & Swarthout, J. Todd, 2013. "Inducing risk neutral preferences with binary lotteries: A reconsideration," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 145-159.
    5. Ostry, Jonathan D. & Furceri, Davide & Papageorgiou, Chris & Wibaux, Pauline, 2023. "Retaliation through Temporary Trade Barriers," CEPR Discussion Papers 17853, C.E.P.R. Discussion Papers.
    6. Vanzetti, David, 1996. "The next round: Game theory and public choice perspectives," Food Policy, Elsevier, vol. 21(4-5), pages 461-477.
    7. Halkos, George, 1994. "A game-theoretic approach to pollution control problems," MPRA Paper 33259, University Library of Munich, Germany.
    8. Hu, Arthur & Hu, Xingwei & Tong, Hui, 2022. "Globalization? Trade war? A counterbalance perspective," MPRA Paper 114871, University Library of Munich, Germany.
    9. Sen, Rahul & Narayanan, Badri & Srivastava, Sadhana & Khorana, Sangeeta & Iyer, Chidambaran, 2020. "The Long-term Impact of Trade Wars and ‘Make in India on the Indian Economy," Conference papers 330229, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Bekkers, Eddy & Teh, Robert, 2019. "Potential economic effects of a global trade conflict: Projecting the medium-run effects with the WTO global trade model," WTO Staff Working Papers ERSD-2019-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    11. Coggins, Jay S., 1993. "Rationalizing the International Coffee Agreement Virtually," Staff Papers 200569, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    12. Arthur Hu & Xingwei Hu & Hui Tong, 2020. "Globalization? Trade War? A Counterbalance Perspective," Papers 2009.03436, arXiv.org, revised Oct 2022.
    13. Furusawa, Taiji & Wen, Quan, 2002. "Disagreement points in trade negotiations," Journal of International Economics, Elsevier, vol. 57(1), pages 133-150, June.
    14. Bekkers, Eddy & Teh, Robert, 2019. "Potential Economic Effects of a Global Trade Conflict: Projecting the medium-run effects with the WTO Global Trade Model," Conference papers 333120, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Shantayanan Devarajan & Delfin S. Go & Csilla Lakatos & Sherman Robinson & Karen Thierfelder, 2021. "Traders' dilemma: Developing countries' response to trade wars," The World Economy, Wiley Blackwell, vol. 44(4), pages 856-878, April.

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