Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain

Horstmann, Ignatius J.; Markusen, James R.; Robles, Jack

doi:10.3386/w8347

Cited by 11 publications

(3 citation statements)

References 12 publications

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“…Second, the gains from issue linkage arise also with linear utility frontiers, thus they are not due to concavity of the utility frontiers. See for exampleSebenius (1983) andHorstmann, Markusen and Robles (2000) for models of issue linkage in bargaining.…”

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confidence: 99%

International Agreements on Product Standards: An Incomplete-Contracting Theory

Battigalli

Maggi

2003

SSRN Journal

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We propose a theory of international agreements on product standards. The key feature of the model is that agreements are viewed as incomplete contracts. In particular, these do not specify standards for products that may arise in the future. One potential remedy to contractual incompleteness is a dispute settlement procedure (DSP) that provides arbitration in states of the world that are not covered by the ex ante agreement. We identify conditions under which a DSP can provide ex-ante efficiency gains, and examine how these gains depend on the fundamentals of the problem. Another potential remedy to contractual incompleteness is given by rigid rules, i.e. rules that are not product-specific. We argue that the nondiscrimination rule is the only rule of this kind that increases ex ante efficiency for any probability distribution over potential products. Finally we show that, under relatively weak conditions, the optimal ex-ante agreement is structured in three parts: (i) a set of clauses that specify standards for existing products; (ii) a rigid nondiscrimination rule, and (iii) a dispute settlement procedure. Although the model focuses on the case of product standards, the analysis suggests a more general incomplete-contracting theory of trade agreements.

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confidence: 99%

International Agreements on Product Standards: An Incomplete-Contracting Theory

Battigalli

Maggi

2003

SSRN Journal

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“…Finally, there is a general literature on cooperative and non-cooperative policy outcomes and issue linking in trade policy (in turn drawing on pure-theory literature which I will not discuss), generally or in a few cases explicitly on environmental negotiations. Literature includes Abrego, Perroni, Whalley and Wigle (2001), Bagwell and Staiger (2001), Conconi and Perroni (2002), Gori and Lambertini (2013), Harstad (2012aHarstad ( , 2012b, Horstmann, Markusen and Robles (2005), Markusen (1975), Markusen, Morey and Olewiler (1995), and Markusen and Wigle (1989), and Spagnolo (2000). I find it hard to draw general conclusions here.…”

Section: Introductionmentioning

confidence: 94%

Per-capita Income as a Determinant of International Trade and Environmental Policies

Markusen¹

2013

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International trade policy analysis has tended to focus on the production side of general equilibrium, with policies such as a tariff or carbon tax affecting international and internal income distributions through a Heckscher-Ohlin nexus of factor intensities and factor endowments. Here I move away from this structure to focus on demand, preferences, and endogenous policy in a trade/environment setting by assuming a high income elasticity of demand for environmental quality. I show how both non-cooperative and cooperative abatement policies in a two-country (rich and poor) setting are affected by nonhomotheticity. I examine "issue linking" in international bargaining, in which one country is both large and rich, and hence has both a high tariff and a high abatement effort in a noncooperative equilibrium. Several cooperative bargaining agreements are computed under alternative assumptions about linking or separating trade and environment negotiations. A final exercise considers "policy leakage", in which one country has an incentive to reduce its optimal abatement effort when the other country increases its effort. The paper will also introduce many readers to a new solver in GAMS for a class of problems referred to as MPECs: mathematical programming with equilibrium constraints. This problem class has wide applications in economics, including solving for multiple optimal tax rates to provide public goods, redistribute income, internalize externalities, exploit monopoly power in trade and so forth, when the underlying general-equilibrium model is a set of constraints on the optimization problem. Draft 0, October 19, 2012I have not written a literature review for this draft, and am currently seeking and reading related papers. I am especially interested in finding empirical work that estimates something like an income elasticity of demand for environmental quality. Please send references with attached notes explaining their relevance. This paper originated following an invitation to present a paper at the conference Environmental Protection and Sustainability Forum, held at the University of Exeter April 13-15, 2011, which reignited a long-dormant interest in trade policy, more specifically trade and the environment. I thank Michael Finus and Christos Kotsogiannis of the University of Exeter for their invitation and their hard work in organizing an excellent conference. The first draft was finally written while a visitor at Hitotsubashi University, and I thank my colleagues there for a delightful and productive three months.

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“…In principle, a case can be made for combining these issues in a single negotiating forum, if it enhances the negotiating parties' flexibility in dividing the gains created by their negotiations. 21 For example, suppose country A pollutes a stream that flows across the border into country B. A negotiation between the governments of countries A and B that focused too narrowly on water standards might fail, if as a consequence the government of country B had nothing to offer country A in return for A's tighter pollution controls.…”

Section: Negotiations In the Wtomentioning

confidence: 99%

It’s A Question of Market Access

2002

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In this paper, we argue that market access issues associated with the question of the optimal mandate of the World Trade Organization should be separated from nonmarket access issues. We identify race-to-the-bottom and regulatory-chill concerns as market access issues and suggest that the WTO should address these concerns. We then describe ways that WTO principles and procedures might be augmented to do so. As for nonmarket access issues, we argue that as a general matter these are best handled outside the WTO, and that, while implicit links might be encouraged, explicit links between the WTO and other labor and environmental organizations should not as a general matter be forged. We view this as a measured approach to labor and the environment within the WTO.To provide the foundation for our proposals, we first present an economic framework.' Suppose there are two countries, country A and country B, whose respective governments are government A and government B. Country A exports good a to country B, and country B exports good /3 to country A. The two governments each choose import tariffs, and they may also select export policies and domestic policies (such as labor and environmental standards). For now, we focus on the selection of import tariffs. Given that this world has no trade agreement, each government selects its import tariff in a unilateral fashion (i.e., to best achieve its own policy objectives).Consider now the trade-offs that government A perceives when it sets its import tariff on good P3. A higher import tariff leads to a higher price of good P in country A. As a consequence, there are winners and losers in country A: the higher price benefits its importcompeting firms and hurts its consumers. Of course, depending on the level of the tariff, an increase may also generate greater tariff revenue for country A, and these proceeds may be distributed to consumers so as to ease (or even reverse) the harm to them. By assessing these various effects and weighing how they contribute to or detract from its objectives, government A determines the unilateral tariff that best achieves its objectives. In similar fashion, government B determines its preferred unilateral tariff on good a. Government A's calculus of winners and losers neglects an important party: the exporters from country B. Exporting firms would naturally be expected to bear some of the incidence of a tax. Put differently, if the import tariff on good P3 is raised by a dollar, then the price of good P3 in country A is likely to rise by something short of a dollar. Some of the tariff hike

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Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain

Cited by 11 publications

References 12 publications

International Agreements on Product Standards: An Incomplete-Contracting Theory

International Agreements on Product Standards: An Incomplete-Contracting Theory

Per-capita Income as a Determinant of International Trade and Environmental Policies

It’s A Question of Market Access

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