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Which Country Loses The Least In A Trade War?

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  • Gaisford, James D.
  • Kerr, William A.

Abstract

Trade actions, which can generally be claimed as trade wars, appear to be on the rise. This is particularly true in the case of agricultural commodities. It is a common perception that large countries will be the victors in such contests and this clearly affects the trade strategies of small countries, including Australia. The relationship between free-trade and trade-war pay-offs in the context of a prisoner's dilemma is explored in this paper. It is shown why neither a favourable terms of trade movement, a flatter import demand curve nor a larger population is, on its own, a sufficient condition for a relative victory in a trade war. The implications for small country trade strategies are then discussed.

Suggested Citation

  • Gaisford, James D. & Kerr, William A., 1992. "Which Country Loses The Least In A Trade War?," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 36(3), pages 1-26, December.
    • Handle: RePEc:ags:ajaeau:22389
    DOI: 10.22004/ag.econ.22389
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    References listed on IDEAS

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    1. Copeland, Brian R., 1989. "Tariffs and quotas : Retaliation and negotiation with two instruments of protection," Journal of International Economics, Elsevier, vol. 26(1-2), pages 179-188, February.
    2. Gaisford, J., 1989. "Which Country Loses The Least In A Trade War?," Papers 122, Calgary - Department of Economics.
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    5. Rodriguez, Carlos Alfredo, 1974. "The non-equivalence of tariffs and quotas under retaliation," Journal of International Economics, Elsevier, vol. 4(3), pages 295-298, August.
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    Cited by:

    1. Kerr, William A., 2018. "Dismantling Trade Agreements: Why Is It So Difficult?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 19(1), June.

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