search query: @author Staiger, R. W. / total: 10
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| Author: | Bagwell, K. Staiger, R. W. |
| Title: | A theory of managed trade |
| Journal: | American Economic Review
1990 : SEP, VOL. 80:4, p. 779-795 |
| Index terms: | TRADE POLICY TARIFFS TRADE BARRIERS INCENTIVES ECONOMIC THEORY |
| Language: | eng |
| Abstract: | A theory is proposed that predicts low levels of protection during periods of "normal" trade volume coupled with episodes of "special" protection when trade volume surge. This dynamic pattern of protection emerges from a model in which countries choose levels of protection in a repeated game facing volatile trade swings. A static and a dynamic model of protection is described in detail. High trade volume leads to a greater incentive to defect unilaterally from cooperative tariff levels. Thus, as the trade volume expands, the level of protection must rise in a cooperative equilibrium to mitigate the rising trade volume and hold the incentive to defect in check. The model chosen is special in a number of ways, the insights it generates is general. |
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