Implications of the “Status Quo” in Theoretical Trade Policy Analyses

──Piecemeal Policy and the Stable Set Approach──

Abstract

I argue that if the notion of the “status quo” is not incorporated appropriately in the models of trade policy issues, there may arise some theoretical/conceptual problems in interpreting the results derived from the models as the guidance for the implementation of trade policies. To clarify the point, I use concrete examples of theoretical analyses of trade policies both in the general equilibrium framework (the piecemeal tariff reforms and the optimal tariffs) and in the game-theoretic framework (the tariff negotiations).
JEL Classification:F13, C71, C72.