Trade compromises between the European Community and the United States : An interest Group-Game Theory approach

Diffusion du document : INRA Station d'Economie et Sociologie rurales 65 rue de Saint-Brieuc 35042 Rennes Cedex (FRA)The role of special interests in the prolonged U.S. and European Community negociations of agricultural policies under GATT are measured by an estimated political payoff function (PPF). The analysis searches for mutually acceptable agreements between the United States and the European Community using a world trade model coupled with game theory. Results suggest that it is the best interest of the United States for the EC to liberalize while the other follows the status quo. Mutual gains in PPF values to both countries are unlikely to exist without altering each country's action space. Permitting compensatory payments to the most influential groups yields liberalization, but free trade does not result