The field of international trade is full of strategic interaction of trade policies between countries, and the interaction between these policies is both cooperative and non-cooperative. However, how to write a paper on the situation and policies of international trade policy? The following is what I recommend to you, I hope you like it!

Chapter 1 "Game Analysis of International Trade Policy"

The field of international trade is full of strategic interaction between countries' trade policies, which are both cooperative and non-cooperative. Using game theory to analyze international trade policy is not only helpful to understand the interactive behavior of trade policies between countries, but also can better explain the seemingly contradictory universal phenomenon of unilateral trade protection and multilateral trade policy cooperation.

[Keywords:] Nash Equilibrium of Trade Policy Game

introduce

Throughout the history of world economic development, the basic purpose of any country entering the international market is to seek to enhance its absolute wealth and promote domestic economic growth. However, this kind of trade between countries is like a "double-edged sword", which not only brings benefits to a country's national economy, but also has a certain impact on its economy. Therefore, all countries regard formulating trade policies that meet their own development needs as the top priority of the whole economic development strategy, enhance international competitiveness, and exchange the maximum benefits with the minimum cost in international trade.

I. Basic types of international trade policies and their evolution

From the perspective of policy itself and function, there are two basic types of international trade policy: free trade policy and protective trade policy. Free trade policy refers to the trade policy that the country adopts the basic position of non-intervention or non-intervention as far as possible in international trade activities, does not set import and export obstacles, does not give domestic importers and exporters various privileges and preferential treatment, and makes goods freely import, export and compete. Compared with the free trade policy, the protective trade policy refers to the trade policy that the state uses its right to intervene and control foreign trade activities, restricts the entry of foreign goods through high tariff or non-tariff measures, protects its own industries from the impact of foreign goods, and gives preferential treatment and subsidies to its own export goods to encourage the export of goods.

Free trade policy is mainly popular in the period of free competition of capitalism. At that time, Britain took the lead in implementing the free trade policy, aiming at obtaining cheap raw materials from overseas and promoting domestic industrial products, from which industrial capital also benefited greatly. However, due to the different levels of industrialization in different countries, some countries, such as the United States, France, Germany and so on, have adopted protective trade policies. After capitalism entered the monopoly stage, because the world market was relatively small and the competition was more intense, developed capitalist countries began to implement trade protectionism policies one after another. However, the protectionist trade policy in this period is different from the previous protectionist trade policy, which is more protective, aggressive and expansionary.

From a global perspective, protective trade policy and the free trade policy are like twin brothers in different countries and at different stages of a country's development. They coexist and cross-use. They seem to be a pair of irreconcilable contradictions. Advocates of free trade can condemn protectionism, and trade protectors can also raise objections to free trade. Although the free trade policy is superior to the interventionist trade protection policy in theory, the ideal free trade policy is not a true portrayal of the trade policies of various countries in reality because of the influence of different interests among different countries on the choice of trade policies. At the same time, because any foreign trade activity involves the interests of at least two countries, but as far as a specific foreign trade activity is concerned, the benefits of one country are often related to the concessions of another country, so the actual international trade policy is actually the result of policy game among countries. A country's current trade policy and the degree of trade intervention actually reflect the mutual balance of interests of all parties.

Second, the new trend of international trade protection

1. From tariff barriers to non-tariff barriers

The measures for diversification of trade protection mainly include: * * 1 * * * setting ladder tariffs according to the effective protection tax rate. * * * 2 * * The activities of levying "countervailing duty" and "anti-dumping duty" have been strengthened. * * * 3 * * Non-tariff barriers are rising. * * * 4 * * emphasizes the management of trade.

2. The number of protected commodity projects is increasing.

The protected commodities range from traditional commodities and agricultural products to high-end industrial products and services.

3. From national trade barriers to regional trade barriers

Economic integration and the development of regional trade groups are one of the most important characteristics of contemporary international economy. The establishment of regional groups is exclusive in itself. When domestic liberalization is strengthened, it will inevitably crowd out and attack competitors outside the groups.

Third, the non-cooperative game of international trade policies between the two countries.

Game is the performance of many people interacting in a framework with interdependent strategies. It mainly studies how competitors adopt the optimal strategy according to the changes of environment and competitors' situation. The so-called interdependence usually means that any player in the game is influenced by the behavior of others, and in turn, his behavior also affects others. Because of this interdependent behavior, the result of the game depends on everyone's decision in the game. No one can completely control what will happen, and no one is isolated. Under the condition of open economy, the trade policies of various countries are strategically interactive and have distinct game characteristics. Generally speaking, the optimal trade policy of each country depends not only on its own choice, but also on the actions of other countries. The trade policies of various countries are actually how to "make decisions" according to the situation of trade games.

In the international trade competition between the two countries, there may be four situations in the choice of international trade policies: both countries adopt closed-door policies to protect international trade; Both countries adopt completely free international trade policies; One country adopts a protective trade policy and another country does not adopt any tariff barrier policy, that is, a free trade policy; One country adopts a free trade policy, while another country adopts protective trade policy. Suppose there are only two countries in the world: country A and country B. In order to gain greater benefits, both sides have two choices: one is to adopt a free trade policy, and the other is to implement protective trade policy. The estimated value is shown in the following figure:

Obviously, no matter what choice country A makes, country B will choose the protective trade policy. Similarly, no matter what choice country B makes, the best choice of country A is to adopt a protective trade policy. This policy decision-making process is completely in line with the result of "prisoner's dilemma". Although the upper left values of * * * 8 and 8 * * * are much better than those of * * * 2 and 2 * * *, from the perspective of a game in which two countries make decisions at the same time, in order to make the decision optimal, countries will eventually choose protection. Therefore, * * * protective trade policy and protective trade policy * * * are dominant strategy equilibrium and non-cooperative Nash equilibrium.

It can be seen that for a country that pursues the maximization of national welfare, it will not choose unilateral free trade measures under any circumstances. Both sides choose the trade protection policy, which will undoubtedly bring losses not only to their own countries, but also to the whole world, and may lead to the gradual escalation of protection until a trade war occurs. This inefficient result of non-cooperation is something that neither country wants to see. To reduce or eliminate this inefficiency, it is necessary to cooperate with each other through policies. Let's analyze it from the perspective of dynamic game.

Fourthly, the cooperative game of international trade policies between the two countries.

The game in the above example is a game. If the game is repeated many times, the situation is different. In game theory, there is a cooperative solution in infinitely repeated games. Repeated game means that the game with the same structure is repeated many times, and the different stages of the game are interdependent, which makes the decision of rational actors not only influenced by their past experiences, but also by the possible future. If the game continues indefinitely, the two sides will gradually move from non-cooperation to mutual cooperation. Because any betrayal will lead to the revenge of the other side in the next game, and the attitude of cooperation between the two sides will bring cooperation benefits.

In the above example, in order to get rid of this "prisoner's dilemma" and seek a long-term relationship to maximize its welfare, the two countries can only change from a non-cooperative game to a cooperative game, and the two sides can negotiate and conclude a trade agreement. * * * With the reduction of trade barriers such as tariffs, they adopt a cooperative attitude in trade policy. As long as both countries abide by the agreement, they will gain the greatest benefits. If any country breaks its word, it will inevitably be retaliated by the other country.

At present, most countries in the world have joined the World Trade Organization. At the same time, the World Trade Organization brings its members into uniform rules. For each member, the agreement is both a promise and a strong constraint. If any country does not abide by the agreement, it will be retaliated or punished by other countries. Generally speaking, the losses caused by the punishment of all other members are far greater than the benefits brought by his unilateral adoption of trade protection policies. The perfect multilateral trading system of WTO coordinates the international trade policies of all countries, improves the interests of all countries, thus promoting trade liberalization and entering a virtuous circle.

It can be seen that the game of international trade policy is a long-term process, and trade liberalization will inevitably become the basic trend of international trade development. But in the short term, countries will not completely give up trade protection while complying with the trend of trade liberalization. Since the reform and opening up, China's foreign trade has achieved rapid development, especially after joining the World Trade Organization, the trade volume has expanded significantly and the status of international trade has improved rapidly. At the same time, with the further fulfillment of China's WTO commitments, China is facing increasingly fierce international trade competition. As a developing country, China is facing increasingly fierce international competition. When formulating international trade policies, we can neither blindly open up nor return to a closed-door state. Instead, we should adopt the strategy of moderate protection and gradual opening up, make full use of the big stage of WTO, actively participate in the game of international trade, improve China's game ability, and strive to maximize profits in the game.

References:

[1] Cheng Dazhong, International Service Trade [M]. Beijing: Higher Education Press, 2004.

[2] Jia Jianhua, International Trade Theory and Practice [M]. Beijing: capital university of economics and business Publishing House, 2005

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