Imperfect Monitoring in International Trade Cooperation

28 Pages Posted: 21 Feb 2011

See all articles by Julia Gray

Julia Gray

University of Pittsburgh - Department of Political Science

René Lindstädt

University of Birmingham

Jonathan Slapin

University of Houston

Date Written: February 18, 2011

Abstract

Under what conditions do states maintain trade cooperation? We explore this question using models of imperfect monitoring. Most formal models of international cooperation rely on signaling games, in which actors' actions are perfectly observable. Here we examine conditions for cooperation when the actions of states are not perfectly observable. We argue that our modeling strategy is a more accurate reflection of the problems that arise in international trade. The paper examines variants of a repeated prisoners' dilemma with imperfect monitoring and offers a novel theoretical finding – free trade will be difficult to sustain when one trading partner is fully committed to free trade.

Keywords: International Trade, Cooperation, Repeated Games, Imperfect Monitoring, United States, China

JEL Classification: F10

Suggested Citation

Gray, Julia and Lindstaedt, Rene and Slapin, Jonathan, Imperfect Monitoring in International Trade Cooperation (February 18, 2011). Available at SSRN: https://ssrn.com/abstract=1763876 or http://dx.doi.org/10.2139/ssrn.1763876

Julia Gray

University of Pittsburgh - Department of Political Science ( email )

4L01 Posvar Hall
Pittsburgh, PA 15260
United States

Rene Lindstaedt (Contact Author)

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

Jonathan Slapin

University of Houston ( email )

4800 Calhoun Road
Houston, TX 77204
United States

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