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Which Country Loses The Least In A Trade War?

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  • James D. Gaisford
  • William A. Kerr

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.
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  • James D. Gaisford & William A. Kerr, 1992. "Which Country Loses The Least In A Trade War?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 36(3), pages 249-274, December.
    • Handle: RePEc:bla:ajarec:v:36:y:1992:i:3:p:249-274
    DOI: j.1467-8489.1992.tb00522.x
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    References listed on IDEAS

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    1. Bagwell, Kyle & Staiger, Robert W, 1990. "A Theory of Managed Trade," American Economic Review, American Economic Association, vol. 80(4), pages 779-795, September.
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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(01), June.

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