TY  - JOUR
AU  - Anderson,James E.
TI  - Commercial Policy in a Predatory World
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12576
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12576
L1  - http://www.nber.org/papers/w12576.pdf
N1  - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
M3  - presented at "SI 2006 International Trade and Investment", July 31-August 3, 2006
AB  - Mutual causation of predation and trade induces novel effects of commercial policy in this paper. The model can explain trade volume responses to market widening initiatives that are otherwise puzzlingly 'too big' or 'too small'. Efficient commercial policy (broadly defined) depends crucially on the strength of enforcement. Externalities arising between traders are normally internalized by subsidizing (taxing) trade when enforcement is weak (strong). Efficient regional policy squeezes weak enforcement markets while subsidizing strong enforcement markets. Tolerance (intolerance) of smuggling is rational when enforcement is weak (strong).
ER  -