Breach, Remedies and Dispute Settlement in Trade Agreements
AbstractWe provide a simple but novel model of trade agreements that highlights the role of transaction costs, renegotiation and dispute settlement. The model allows us to characterize the appropriate remedy for breach and whether the agreement should be structured as a system of "property rights" or "liability rules." We then study how the optimal rules depend on the underlying economic and contracting environment. Our model also delivers predictions about the outcome of trade disputes, and in particular about the propensity of countries to settle early versus "fighting it out."
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Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1735.
Date of creation: Oct 2009
Date of revision:
Publication status: Published in Quarterly Journal of Economics (February 2011) 126(1): 475-515
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Other versions of this item:
- Giovanni Maggi & Robert W. Staiger, 2009. "Breach, Remedies and Dispute Settlement in Trade Agreements," NBER Working Papers 15460, National Bureau of Economic Research, Inc.
- Maggi, Giovanni & Staiger, Robert, 2009. "Breach, Remedies and Dispute Settlement in Trade Agreements," CEPR Discussion Papers 7527, C.E.P.R. Discussion Papers.
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
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