Deliberative Trade Policy

Evolutionary and Institutional Economics Review, Vol. 3, No. 2, 2007

Posted: 11 Dec 2006

See all articles by Carsten Herrmann-Pillath

Carsten Herrmann-Pillath

Max Weber Center for Advanced Cultural and Social Studies

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Abstract

Trade policy is normally evaluated according to the standards of allocative efficiency. In contrast, this paper tries to understand trade policy as a solution to the problems of international communication among governments. Basic categories of speech act theory are applied on political action, an approach which I merge with the "cheap talk" paradigm in economics. As a result, I distinguish between trade policy being negotiated via verbal and non-verbal communication, and trade policy as a non-verbal means of deliberation among governments. I apply this approach on a number of recent empirical studies on trade policy, and I draw normative conclusions for the communicative design of international trade policy. The criterion of successful communication replaces the criterion of allocative efficiency, so that well-established results of the political economy of trade appear in a new light. In particular, many institutions and practices of international trade policy that directly contradict efficiency criteria can be explained as enabling the governments to communicate successfully and to reach a deliberative equilibrium in international political economy, which will be influenced by the given distribution of power across countries.

Keywords: trade policy, political communication, language and economics, signaling

JEL Classification: B52, F13, Z00

Suggested Citation

Herrmann-Pillath, Carsten, Deliberative Trade Policy. Evolutionary and Institutional Economics Review, Vol. 3, No. 2, 2007, Available at SSRN: https://ssrn.com/abstract=950574

Carsten Herrmann-Pillath (Contact Author)

Max Weber Center for Advanced Cultural and Social Studies ( email )

Nordhäuserstr. 74
Erfurt, 90228
Germany

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