Strategic trade in international markets is important for agricultural and other basic commodities. State trading companies (STCs) and large private firms control most of the trade volume. In this study the authors use concepts of modern game theory to treat time inconsistency issues associated with strategic trade. The results are particularly applicable to trade in commodities with lengthy production periods, such as agriculture. The model considered here provides an important context for exploring impacts of signaling, reputation, and third party interventions that approximate the institutions and authorities that govern international trade.
This paper is to be published as a chapter in the book The Economics of World Wheat Markets. This paper was presented at a conference on “The Economics of World Wheat Markets: Implications for the Northern Rockies and the Great Plains,” Trade Research Center, Montana State University, May 29-June 2, 1997.
Melkonian, Tigran A. and Johnson, Stanley R., "State Trading Companies, Time Inconsistency, Imperfect Enforceability and Reputation" (1998). CARD Working Papers. 222.