Specific Institutional Aspects of International Cooperation - A GAME Theoretic Account -

Traditionally the theory of international trade has been dominated by extending general equilibrium analysis, i.e. by assuming competitive markets in all countries without international factor mobility, but more or less international mobility of products. This led to well-known reasons for international trade like comparative cost advantages, elaborated by the traditional theory of international trade. Notice, however, that international trade can already be triggered by different market organization in different countries. An extreme case would be a centrally planned economy facing a market economy. Here the centrally planned economy would choose its optimal point on the offer curve of the market economy and thereby induce international trade even when the two countries are otherwise completely identical (GüTh, 1976).