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WHICH COUNTRY LOSES THE LEAST IN A TRADE WAR?

WHICH COUNTRY LOSES THE LEAST IN A TRADE WAR? 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

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References (10)

Publisher
Wiley
Copyright
Copyright © 1992 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/j.1467-8489.1992.tb00522.x
Publisher site
See Article on Publisher Site

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.

Journal

The Australian Journal of Agricultural Resource EconomicsWiley

Published: Dec 1, 1992

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