Economists emphasize the welfare gains of unrestricted trade, but politicians worry about the income distribution effects of increased competition. We show that the welfare gains of a trade shock become ambiguous if inaccurate information hinders optimal income redistribution with distortionary...

A simple general equilibrium model is borrowed from economics to study alternative foreign policy strategies of regional powers that are conditional on external constraints. An equilibrium hegemonic strategy is modeled as the joint production and consumption of two “goods” (empire and...