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Limits And Difficulties In Implementing The Strategic Trade Policy

Author

Listed:
  • Liviu-George Maha

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Andreea-Nicoleta Donici

    (Alexandru Ioan Cuza University of Iasi, Romania)

  • Andreea Maha

    (Alexandru Ioan Cuza University of Iasi, Romania)

Abstract

This paper provides a critical analysis of the strategic trade policy, in terms of limitations and difficulties involved in its implementation. Even there are many arguments used by its supporters for justifying the importance of this type of measures, it is impossible for the state to formulate useful interventionist policies, given the empirical difficulties involved in modeling markets with imperfect competition. Also, any potential gain created by government intervention can dissipate through the entry of new firms, stimulated by the possibility of such profits, while the need of a general equilibrium increases the difficulty of interventionist process. There are also some risks induced by using strategic trade policy, the risk of retaliation and a trade war with the country affected by the measure and the diversion of government intervention by certain interests, transforming it into an inefficient income redistribution national program.

Suggested Citation

  • Liviu-George Maha & Andreea-Nicoleta Donici & Andreea Maha, 2012. "Limits And Difficulties In Implementing The Strategic Trade Policy," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(4), pages 736-746, December.
    • Handle: RePEc:jes:wpaper:y:2012:v:4:i:4:p:736-746
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    strategic trade policy; free trade; retaliation; trade war; general equilibrium; interest groups Romania;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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