Negotiated Trade Restrictions with Private Political Pressure
The authors consider a home government with political pressure to restrict trade. The foreign country is compensated with a portion of the tariff revenues or quota rents, but cannot directly observe the political pressure abroad. In this setting, the two countries negotiate over the volume of trade and transfer of rents, depending on the level of political pressure. The authors determine globally optimal, incentive-compatible trade policies in which the home government has no incentive to overstate (or understate) the pressure for protection. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 106 (1991)
Issue (Month): 4 (November)
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References listed on IDEAS
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