Strategic Trade Policy Under Incomplete Information
This paper examines equilibrium trade policies when firms have better information than governments about the profitability of the industry. Contrary to the intuition that the policy makers' lack of information should reduce their incentives to engage in strategic trade intervention, the analysis suggests that information asymmetries may increase trade policy distortions in equilibrium, and ultimately worsen the Prisoner's Dilemma between governments.
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|Date of creation:||1997|
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