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Diversity and the disinterest in trade liberalization: on the prospects of self-enforcing cooperation

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  • Barbara Dluhosch

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  • Stefanie Krause
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    Abstract

    International economic order, including the rules of the game for trade, usually suffers from enforcement problems. We examine the prospects of self-enforcing cooperation as trade relationships evolve. It turns out that factor differentials and specificities are of utmost importance. In fact, prospects of self-enforcing cooperation are the lower the more diverse the countries are on that score. Differences may even result in countries showing an outright disinterest in trade liberalization. Notably, this result also holds in a recurrent, that is, in an evolutionary setting that otherwise induces cooperation in trade liberalization with self-enforcing properties. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s00191-012-0267-3
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    Bibliographic Info

    Article provided by Springer in its journal Journal of Evolutionary Economics.

    Volume (Year): 23 (2013)
    Issue (Month): 2 (April)
    Pages: 455-475

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    Handle: RePEc:spr:joevec:v:23:y:2013:i:2:p:455-475

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    Related research

    Keywords: Trade liberalization; Protectionism; Retaliation; Evolution; Cooperation; F13; F50; O19;

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    1. Gene M. Grossman & Elhanan Helpman, 1993. "Trade Wars and Trade Talks," NBER Working Papers 4280, National Bureau of Economic Research, Inc.
    2. Christopher S. P. Magee & Stephen P. Magee, 2008. "The United States is a Small Country in World Trade," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 990-1004, November.
    3. Kyle Bagwell & Robert W. Staiger, 2011. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," American Economic Review, American Economic Association, vol. 101(4), pages 1238-73, June.
    4. Anne O. Krueger, 1999. "Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 105-124, Fall.
    5. Carsten Herrmann-Pillath, 2006. "Reciprocity and the hidden constitution of world trade," Constitutional Political Economy, Springer, vol. 17(3), pages 133-163, September.
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    7. Geoffrey M. Hodgson, 2002. "Darwinism in economics: from analogy to ontology," Journal of Evolutionary Economics, Springer, vol. 12(3), pages 259-281.
    8. Geoffrey M. Hodgson, 2004. "Hayekian evolution reconsidered: a response to Caldwell," Cambridge Journal of Economics, Oxford University Press, vol. 28(2), pages 291-300, March.
    9. Bruce Caldwell, 2004. "Hayekian evolution reconsidered: a reply to Hodgson," Cambridge Journal of Economics, Oxford University Press, vol. 28(2), pages 301-305, March.
    10. Eicher, Theo S. & Henn, Christian, 2011. "In search of WTO trade effects: Preferential trade agreements promote trade strongly, but unevenly," Journal of International Economics, Elsevier, vol. 83(2), pages 137-153, March.
    11. Caldwell, Bruce, 2001. "Hodgson on Hayek: A Critique," Cambridge Journal of Economics, Oxford University Press, vol. 25(4), pages 539-53, July.
    12. Stefano Fiori, 2006. "The emergence of institutions in Hayek’s theory: two views or one?," Constitutional Political Economy, Springer, vol. 17(1), pages 49-61, 03.
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