Suchergebnisse

Abstract

This paper explores the limits of international trade cooperation in the presence of a dispute settlement procedure. The dispute settlement procedure is modeled as a set of conditions imposed on the punishment equilibria of a repeated tariff game, conditions that are consistent with the World Trade Organization (WTO) principles of conciliation & reciprocity. The resulting equilibria are "renegotiation-proof" in the sense of Pearce (1987). We find that tariff agreements cannot achieve free trade in the presence of the dispute settlement procedure, although the cost of this limitation becomes small for high discount factors. Quota agreements can achieve free trade under the dispute settlement procedure; however, countries would always prefer to settle disputes with tariff sanctions, if given a choice. These results are related to recent dispute settlement reforms. 4 Figures, 1 Appendix, 32 References. Adapted from the source document.

This paper investigates the relationship between trade & competition policy within a model where market collusion & protectionist lobbying are themselves related. Collusion & lobbying are modeled as joint products of the same collective effort of firms. In equilibrium, firms cannot achieve greater cooperation in one dimension without reducing it in the other. A trade agreement that limits the effectiveness of lobbying may cause firms to increase market collusion, thereby increasing the domestic price. Thus, international trade agreements may run counter to the goals of competition policy. On the other side, a more restrictive competition policy is shown to either reduce the domestic price or reduce import protection. Thus, competition policy tends to promote trade policy goals. The reason is that restrictive competition policy undermines collusion at the source -- it decreases the per-firm benefit to collusion relative to the gains from deviating -- reducing firm cooperation in both dimensions. 6 Figures, 20 References. Adapted from the source document.

This paper advances a model of multilateral trade negotiations to analyze the effects of the most‐favored‐nation clause (MFN) on international trade agreements. Negotiations are modeled in a three player, non‐cooperative, dynamic bargaining framework that admits the possibility of both bilateral and multilateral agreements. The central result is that bargaining in the presence of MFN results in Pareto efficient, mutually advantageous, multilateral trade agreements. The free‐rider problem commonly attributed to the presence of MFN does not arise, and, under a condition of symmetry, each country receives equal gains (or reciprocity) from the agreement. In the absence of MFN, many of these properties may not hold. Examples are given in which at most two of the three countries benefit from agreement. These results suggest that many of the criticisms levied against the MFN clause are misplaced; moreover, attempts to replace unconditional MFN with conditional MFN may sacrifice many of the long‐held values of the GATT.

Abstract.  This paper examines the effect of a tariff on the decision of a foreign monopolist to adopt 'clean' technology, which reduces the flow of a negative cross‐border externality. The clean technology increases the marginal cost of production relative to the dirty technology, but only the firm knows the extent of the increase. Under complete information, despite its protectionist motivation, the importing country's optimal tariff induces the firm to adopt the clean technology if and only if it is globally efficient to do so. Under incomplete information, this efficiency property is disrupted, and the firm biases its choice in favour of dirty technology. JEL classification: F13, F18