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A Same-Theoretic Analysis of Agricultural Trade Policy

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  • David Vanzetti

    (School of Economics, La Trobe University)

Abstract

In countries with sufficient market power to influence world prices, agricultural trade policymakers are concerned about the induced changes in other countries' policies, and the time profile of the effects of policies. The strategic and dynamic elements of the problem can be jointly considered in a dynamic game framework, in which each country sets an export tax or import tariff so as to maximize a quadratic objective function, subject to linear intertemporal constraints. An iterative optimal control procedure is used to account for the interdependence of all countries' policies. The welfare functions are weighted according to the policymakers' revealed preferences. The weights significantly influence the outcome of a trade war. Copyright 1991 by The Economic Society of Australia.

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Bibliographic Info

Paper provided by School of Economics, La Trobe University in its series Working Papers with number 1989.09.

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Date of creation: 1989
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Handle: RePEc:trb:wpaper:1989.09

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