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Information Asymmetry and the Problem of Transfers in Trade Negotiations and International Agencies


  • Koichi Hamada

    () (Economic Growth Center, Yale University)

  • Shyam Sunder

    () (School of Management, Yale University)


This paper studies the role of transfers among groups within a country as well as among countries in a two level game of nternational 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 transfer process uses up additional resources. The difficulty of making transfers renders it less likely that a nation would find it individually rational to participate as a member of an international institution. Costly transfers render the internal and international adjustment difficult, and serve as a barrier to trade liberalization. Costly international transfers harden the resistance against trade liberalization in the (potentially) recipient country and soften it in the (potentially) donor country.

Suggested Citation

  • Koichi Hamada & Shyam Sunder, 2005. "Information Asymmetry and the Problem of Transfers in Trade Negotiations and International Agencies," Working Papers 910, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:910

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    References listed on IDEAS

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    Cited by:

    1. Dluhosch Barbara, 2010. "The Second-Mover Advantage in International Trade Negotiations," Global Economy Journal, De Gruyter, vol. 10(1), pages 1-37, February.

    More about this item


    International trade; tariff negotiation; asymmetric Information; transfer; WTO; common agency; two-level game;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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