Agricultural trade negotiations are modelled using a non-cooperative and cooperative game theoretic framework. The model distinguishes between the European Union (EU), the United States (US) and a politically passive rest-of-the-world. Particular emphasis is placed on the effect of the exchange rate on the equilibrium outcome of the games. Through the use of intra-country compensation, the analysis shows that the US is able to convince the EU to adopt modest reform. With inter-country compensation the EU chooses a decreased level of protection, but does not choose completely free trade.
Bibliographical noteFunding Information:
This research was supported by Minnesota Agricultural Experiment Station Project 14065 'Economic Integration and Disintegration in Europe: Implications for US Agriculture'. P. Lynn Kennedy is an assistant professor, in the Department of Agricultural Economics and Agribusiness, at Louisiana State University Agriculture Center, Baton Rouge, USA; Harald von Witzke is a professor, at the Institut fur Agrarpolitik, Marktlehre und Agrarentwicklung, Humboldt University, Berlin, Germany; and Terry L. Roe is a professor, at the Center for International Food and Agricultural Policy and Department of Applied Economics, University of Minnesota, St. Paul, USA.
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- Agricultural trade negotiations
- Game theory