Agricultural trade negotiations as a strategic game

Abstract

This study views multilateral tradc negotiations as a strategie garne among nations or regions, including taxpayer, consumer, and producer components. Payoffs arc calculated from an interrncdiatc-run international trade rnodel initialized with 1989 data. For the public at large, the Nash equilibrium and socially optimal outcomc is liberalization of trade -unilateral or multilateral. Maintenance of the status quo of market distortions eosting the world billions of dollars each year is rational only if producer payoffs are sovereign so that strategies optimal for producers arc considered optimal for nations. Remediai policies are discussed, including opportunities for economie education, political system reform, and less incentives for producers to scuttle multilateral trade negotiations. * Corresponding author, Elsevier Science B.V. SSD/ 0169-5150(93)EOOI8-! subsidies prompted the U.S. initially to press for

Farm price and income policy: lessons from history

“…Global evidence also points to political decision makers, the agent, as serving farmers rather than the public at large. Makki, Tweeten, and Gleckler (1994) employed game theory to analyze outcomes from freer trade for countries and regions as predicted by an international agricultural trade model. The difference between actual trade and welfare-maximizing outcomes predicted by the strategic trade model for food consumers, producers, taxpayers, and the public at large only made sense if the principal being served by international trade negotiations is commercial farmers, not society.…”

Trade, Uncertainty, and New Farm Programs

“…That is, wide adoption and use by foreign countries of our dumping policies will cause them to reject our farm products which for sound economic reasons often are exported by us below the full cost of production. The big losers from trade barriers are the countries which practice them (Makki et al, 1994). The US gains from multilateral and unilateral trade liberalization but producers gain most from multilateral liberalization.…”