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Information Asymmetry and the Problem of Transfers in Trade Negotiations and International Agencies

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Author Info
Koichi Hamada () (Economic Growth Center, Yale University)
Shyam Sunder () (School of Management, Yale University)

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Abstract

This paper studies the role of transfers among groups within a country as well as among countries in a two level game of nternational trade negotiations. We show that in order to realize the intended transfer in the presence of asymmetric information on the states of recipients (and donors), a transfer process uses up additional resources. The difficulty of making transfers renders it less likely that a nation would find it individually rational to participate as a member of an international institution. Costly transfers render the internal and international adjustment difficult, and serve as a barrier to trade liberalization. Costly international transfers harden the resistance against trade liberalization in the (potentially) recipient country and soften it in the (potentially) donor country.

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Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 910.

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Length: 35 pages
Date of creation: May 2005
Date of revision:
Handle: RePEc:egc:wpaper:910

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Related research
Keywords: International trade; tariff negotiation; asymmetric Information; transfer; WTO; common agency; two-level game;

Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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