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Conditional versus unconditional trade concessions for developing countries
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Conconi, Paola and Perroni, Carlo (2012) Conditional versus unconditional trade concessions for developing countries. Canadian Journal of Economics, Vol.45 (No.2). pp. 613-631. doi:10.1111/j.1540-5982.2012.01711.x ISSN 0008-4085.
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Official URL: http://dx.doi.org/10.1111/j.1540-5982.2012.01711.x
Abstract
Abstract We examine how trade liberalization by a large trading partner affects the ability of a small country's government to sustain free trade through a reputational mechanism. Unconditional liberalization by the large trading partner has an ambiguous effect on the small country's dynamic incentives. Liberalization through a reciprocal trade agreement, in which the large country lowers its tariffs conditionally on the small country doing the same, unambiguously dominates unconditional liberalization by the large country as a way of boosting trade reforms and reinforcing policy credibility in the small country. However, if capacity in the import-competing sector can be reduced only gradually, a conditional, reciprocal agreement may require an asynchronous exchange of concessions, where the large country liberalizes before the small country does. © Canadian Economics Association.
Item Type: | Journal Article | ||||
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Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | Canadian Journal of Economics | ||||
Publisher: | Wiley-Blackwell Publishing, Inc. | ||||
ISSN: | 0008-4085 | ||||
Official Date: | May 2012 | ||||
Dates: |
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Volume: | Vol.45 | ||||
Number: | No.2 | ||||
Page Range: | pp. 613-631 | ||||
DOI: | 10.1111/j.1540-5982.2012.01711.x | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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