Now showing 1 - 4 of 4
  • Publication
    Sustaining free trade in repeated games without government commitment
    (University College Dublin. School of Economics, 1990)
    The paper examines how free trade can be sustained in a repeated tariff game in a simple two-country general equilibrium model. In the standard model, free trade can be sustained by "punishment strategies" with only a mild degree of forward looking behaviour on the part of governments. However, when there are short term factor market rigidities, and governments cannot precommit to an ex-ante optimal tariff, it may be much more difficult to sustain free trade. This is illustrated in two models.
      72
  • Publication
      73
  • Publication
    The trade-off between precommitment and flexibility in trade union wage setting
    (University College Dublin. School of Economics, 1990) ;
    This paper examines two types of contract structures in a model where a trade union supplies labor to an industry, and sets the wage to maximize welfare. Firms' investment is endogenous, and the industry price is stochastic. Under short-term contracts, the union sets the wage after the firms' investment is in place, but also after the industry price is known. Under long- term contracts, the wage is chosen before investment and before the industry price is known. With short-term contracts the union has the benefit of ex-post wage flexibility, while under long-term contracts the union has the benefit of advance wage commitment which may be an important determinant of contract structure. The trade-off is examined in detail.
      286
  • Publication
    Growth, specialization, and trade liberalization
    (University College Dublin. School of Economics, 1990)
    This paper examines a two-way interaction between trade liberalization and economic growth. Through dynamic increasing returns to specialization, international trade can increase world growth rates. But growth, through specialization, alters patterns of comparative advantage, changing the incentives to levy tariffs in a dynamic tariff game between governments. Two types of equilibria are analyzed. In one, average growth rates are low, tariffs are high and rising, the ratio of exports to income (the trade ratio) is low, and falls to zero asymptotically. In the other, growth rates are high, tariffs are low and falling, the trade ratio is higher, and rises over time. The conditions under which each type of equilibrium will be observed are investigated.
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