MANAGED TRADE WITH IMPERFECT INFORMATION

This article illustrates the importance of imperfect information in self-enforcing trade agreements. It shows that expected welfare is higher with current period uncertainty, and "a high level" of uncertainty may "even" undermine the need for a safeguard clause. These results were derived by extending the seminal paper by Bagwell and Staiger ("The American Economic Review" 80 (1990), 779-95) to account for current period uncertainty. Copyright (2010) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.