We consider a general equilibrium model of international trade with two identical countries, two commodities, a terms-of-trade externality, and two layers of informational asymmetries. First, domestic producers have private information on their technology. Such within-country informational...

The formula approach used in many trade negotiations involves large formula cuts in high tariffs, with flexibilities that allow smaller cuts for selected products. Difficulties in evaluating the effects of these exceptions can create major problems. We use a political-economy welfare function...