Trade Agreements as Endogenously Incomplete Contracts

Trade Agreements and Endogenously Incomplete Contracts: A Political Economy Approach

We develop a political economy model of trade agreements that incorporates contracting costs and uncertainty. The model delivers simple expressions for policy bindings with parameters relating to trade shocks and to political demand shocks. We identified conditions under which the trade volume is positively associated with the payoff of restricting production subsidy/consumption tax. Our model ...

Collective Agreements : Incentive Contracts

The paper considers collective agreements that are signed by a government agency and an industry which have an energy saving target. The target achievement is observable, but the energy saving actions undertaken by firms in the industry are not. We consider such agreements as firm contracts that depend on whether the industry complies with the target or not. We show that first best regulation c...

Endogenously Incomplete Markets: Macroeconomic Implications

Endogenously incomplete models derive restrictions on asset trading from primitive constraints on the enforcement and monitoring technologies available to societies. They have been applied to a wide variety of macroeconomic problems. This essay reviews some of these applications and the models that underpin them.

Preferential Trade Agreements

Foundations of Incomplete Contracts

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