2021
DOI: 10.3982/ecta16084
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Quantitative Analysis of Multiparty Tariff Negotiations

Abstract: We develop a model of international tariff negotiations to study the design of the institutional rules of the GATT/WTO. A key principle of the GATT/WTO is its most‐favored‐nation (MFN) requirement of nondiscrimination, a principle that has long been criticized for inviting free‐riding behavior. We embed a multisector model of international trade into a model of interconnected bilateral negotiations over tariffs and assess the value of the MFN principle. Using 1990 trade flows and tariff outcomes from the Urugu… Show more

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Cited by 20 publications
(7 citation statements)
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“…For this reason, it is useful to adopt a common shorthand for referring to models that share this prediction about the purpose of a trade agreement, and I will follow Bagwell and Staiger's (2002) terminology and sometimes make use of the phrase "terms-of-trade theory of trade agreements"as a catchall for models of this kind. 24 This is not to say that preventing terms-of-trade manipulation is the only possible purpose for a trade agreement. Indeed, as I noted at the outset of this chapter, I am intentionally abstracting from the possibility that a trade agreement could serve as a policy commitment device for its member governments when those governments struggle to make policy commitments to their private sectors on their own.…”
Section: The Purpose Of Trade Agreementsmentioning
confidence: 99%
“…For this reason, it is useful to adopt a common shorthand for referring to models that share this prediction about the purpose of a trade agreement, and I will follow Bagwell and Staiger's (2002) terminology and sometimes make use of the phrase "terms-of-trade theory of trade agreements"as a catchall for models of this kind. 24 This is not to say that preventing terms-of-trade manipulation is the only possible purpose for a trade agreement. Indeed, as I noted at the outset of this chapter, I am intentionally abstracting from the possibility that a trade agreement could serve as a policy commitment device for its member governments when those governments struggle to make policy commitments to their private sectors on their own.…”
Section: The Purpose Of Trade Agreementsmentioning
confidence: 99%
“…Since the influential work of Ossa (2014), a number of studies have analyzed the welfare effects of cooperative and noncooperative trade policies through numerical optimization (Mei, 2020; Bagwell et al., 2021; Beshkar et al., 2022; de Souza et al., 2022). Several recent works have also advanced this strand of literature by providing analytical characterization of optimal trade and industrial policy (Beshkar and Lashkaripour, 2020; Bartelme et al., 2021; Lashkaripour, 2021; Lashkaripour and Lugovskyy, 2023).…”
Section: Introductionmentioning
confidence: 99%
“…One strand of this literature investigates the welfare consequences of trade policies that countries implement in cooperative and non-cooperative games. These settings include tariff cooperation (Ossa 2014), competition on non-tariff trade barriers (Mei 2021), "Most Favored Nation" (MFN) rules (Bagwell et al 2021), export subsidies (Beshkar and Lashkaripour 2020), market access concessions (Beshkar et al 2022), deep trade agreements (Lashkaripour and Lugovskyy 2021), and industrial policies (Bartelme et al 2021). They find that tariffs should be larger on sectors with larger trade elasticity and that there are welfare gains from cooperation.…”
Section: Introductionmentioning
confidence: 99%
“…We contribute to this literature by studying the problem of countries trading-off sanctions and welfare-maximizing trade policy. In our model, countries simultaneously choose import tariffs not only to maximize their income, as in Ossa (2014), Mei (2020), Mei (2021), Bagwell et al (2021), Beshkar et al (2022) and many others, but also to minimize Russia's income, with different weights placed on these objectives. As countries put more weight into hurting the Russian economy, optimal tariffs rise more in the sectors that have larger trade flows and higher trade elasticities.…”
Section: Introductionmentioning
confidence: 99%