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MANAGED TRADE WITH IMPERFECT INFORMATION *
Author(s) -
Hochman Gal,
Segev Ella
Publication year - 2010
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2009.00576.x
Subject(s) - safeguard , imperfect , perfect information , economics , welfare , information asymmetry , microeconomics , actuarial science , public economics , international trade , market economy , linguistics , philosophy
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.