No abstract

This paper explores the implications of fairness and reciprocity for self-enforcing international environmental agreements on pollution abatement. Reciprocal countries reward fair behavior (positive reciprocity), but retaliate against countries behaving unfairly (negative reciprocity). We demonstrate that reciprocal countries that have moderate expectations from each other with respect to their national abatement strategies can support a greater degree of environmental cooperation than self-interested ones. However, when only very high abatement standards are deemed fair, then reciprocity could have a detrimental effect on international environmental cooperation. Our model therefore provides a novel perspective on the role of expectations in environmental negotiations.

We investigate the implications of preferential trade agreements (PTAs) for interstate con ‡ict. We set up a two-stage game with three competing importers, where …rst, two of the countries decide on whether to initiate war against each other, and subsequently, all three countries select their import tari¤s. We show that PTAs produce both a "peace-creation" and a "peace-diversion" e¤ect, whereby they reduce the likelihood of con ‡ict between member countries (peace creation), but could render the eruption of war between member and non-member countries more likely (peace diversion). This paper is the …rst to identify and explicitly model the peace-diversion e¤ect of PTAs, and is also the only one in this literature to endogenize countries' terms of trade. We use data from the Correlates of War project to empirically test these predictions, and after controlling for endogeneity, we …nd robust evidence of both peace creation and peace diversion in relation to free-trade-area as well as customs-union establishment.

The paper examines the impact of regionalism on the process of multilateral trade liberalization when countries are asymmetric. The author uses a three-country, three-good, competing exporters model, with countries being symmetric in everything but their discount factors. The equilibrium regional agreement is found to be a customs union between a patient and an impatient country and that the impact of regionalism depends on the discount factors. The impact of regionalism on multilateral trade liberalization depends critically on which countries engage in regionalism. Copyright Blackwell Publishing Ltd 2004.

No abstract