The theory of optimal delegation with an application to tariff caps

Manuel Amador, Kyle Bagwell

Research output: Contribution to journalArticlepeer-review

60 Scopus citations

Abstract

We consider a general representation of the delegation problem, with and without money burning, and provide sufficient and necessary conditions under which an interval allocation is optimal. We also apply our results to the theory of trade agreements among privately informed governments. For both perfect and monopolistic competition settings, we provide conditions under which tariff caps are optimal.

Original languageEnglish (US)
Pages (from-to)1541-1599
Number of pages59
JournalEconometrica
Volume81
Issue number4
DOIs
StatePublished - Jul 1 2013

Keywords

  • Money burning
  • Optimal delegation
  • Tariff caps
  • Trade agreements

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