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Myopic or farsighted : bilateral trade agreements among three symmetric countries

  • Tsubota, Kenmei
  • Kawasaki, Yujiro
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    We examine network formation via bilateral trade agreement (BTA) among three symmetric countries. Each government decides whether to form a link or not via a BTA depending on the differential of ex-post and ex-ante sum of real wages in the country. We model the governmental decision in two forms, myopic and farsighted and analyze the effects on the BTA network formation. First, we find that both myopic and farsighted games never induce the formation of star networks nor empty networks. Second, the networks resulting from myopic game coincides with those resulting from farsighted games.

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    File URL: http://ir.ide.go.jp/dspace/bitstream/2344/940/1/ARRIDE_Discussion_No.274_tsubota.pdf
    File Function: First version, 2011
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    Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 274.

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    Date of creation: Jan 2011
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    Publication status: Published in IDE Discussion Paper. No. 274. 2011. 1
    Handle: RePEc:jet:dpaper:dpaper274
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