Managed Trade With Imperfect Information*

Abstract

This article illustrates the importance of imperfect information in self-enforcing trade agreements. It shows that expected welfare is higher with current period uncertainty, and "a high level" of uncertainty may "even" undermine the need for a safeguard clause. These results were derived by extending the seminal paper by Bagwell and Staiger ("The American Economic Review" 80 (1990), 779-95) to account for current period uncertainty. Copyright (2010) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Is the WTO Passé?

“…They find that the most cooperative trade agreement for governments with moderate patience is countercyclical: all else equal, the most cooperative tariffs are 62 Hochman and Segev (2010) extend the BagwellStaiger (1990) model in a different direction by allowing that governments may imperfectly observe the trade-volume shock before applying tariffs. Another interesting extension is considered by Tabakis (2010), who examines the use of special protection when countries are transitioning into preferential trading agreements.…”

Collusion by Algorithm: Does Better Demand Prediction Facilitate Coordination Between Sellers?

“…In a model of collusion where the cartel members divide the market between themselves, Sugaya and Wolitzky (2018) argue that better information about past behavior in another firm's market may allow a firm to better predict future demand conditions in that market, which in turns helps the firm to tailor deviations -in which it deviates by entering its rival's market -to demand conditions. And Hochman and Segev (2010) show that better information about current demand conditions can reduce welfare in a model of self-enforcing international trade agreements. Our contribution to this literature is to explicitly analyze the effects of improved demand prediction on profits and consumer welfare in a simple model of price collusion with perfect monitoring and a single market.…”

In or Out? Standards, Discretion, Compliance and the WTO

“… Current (Hungerford, ; Hochman and Segev, ) and future (Frischmann, ; Koremenos, ; Frischmann and Hartigan, ) uncertainty regarding benefits and costs of compliance have been considered in the literature of trade agreements. …”