Arbitration in International Trade
AbstractThe great majority of international contracts provide for arbitration in the event of dispute. Legal scholars argue that international arbitration is causing the development of a legal doctrine attuned to the needs of business and independent of national laws. This paper studies international arbitration as a prime example of private trade shaping international institutions. The provisions and the practice of international arbitration are reviewed, and a general equilibrium model of the relationship between the expansion of international trade and the adoption of arbitration is presented. The model focuses on the heterogeneity of economic agents in terms of their legal needs. It shows how arbitration alters the size and composition of markets, while at the same time responding to exogenous changes in trade. In addition, it shows how the legal services provided by the courts deteriorate in the presence of arbitration, predicting that the share of traders using arbitration should rise as markets expand. Overall, the model does remarkably well in generating results commonly discussed in the legal literature.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 721.
Date of creation: Sep 1992
Date of revision:
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Other versions of this item:
- Alessandra Casella, 1992. "Arbitration in International Trade," NBER Working Papers 4136, National Bureau of Economic Research, Inc.
- Alessandra Casella., 1992. "Arbitration in International Trade," Center for International and Development Economics Research (CIDER) Working Papers C92-003, University of California at Berkeley.
- F15 - International Economics - - Trade - - - Economic Integration
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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