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Why is the Doha development agenda failing? And what can be done?: A computable general equilibrium-game theoretical approach

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  • Bouet, Antoine
  • Laborde, David

Abstract

"We herein use a world Computable General Equilibrium (CGE) model to simulate 143 potential trade reforms and seek solutions to the issues hampering progress in the Doha Development Agenda (DDA). Inside the domain defined by all these possible outcomes, we apply the axiomatic theory of bargaining and select the Nash solution of cooperative games. The solutions vary according to the objective functions adopted by the trade negotiators. When real income is the objective and services are excluded, or when optimizing terms of trade is the objective, the Nash solution is the status quo. Trade liberalization is feasible only when the negotiators focus on national exports or Gross Domestic Product (GDP). Our assessment of some possible solutions reveals that excluding members having a GDP below a certain threshold improves the bargaining process, regardless of the governments' objective. Formation of coalition, such as the G20, constitutes an option for its members to block outcomes imposed by rich members. We also find that side payments may be a solution, but represent a very high share of the global income gain." from authors' abstract

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 877.

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Date of creation: 2009
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Handle: RePEc:fpr:ifprid:877

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Keywords: Trade negotiations; Computable general equilibrium (CGE) modeling; Nash solution; Side payments; Cooperative games; Globalization; Markets; Doha Development Agenda;

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  1. Tyers, Rod, 1990. "Implicit policy preferences and the assessment of negotiable trade policy reforms," European Economic Review, Elsevier, vol. 34(7), pages 1399-1426, November.
  2. Kyle Bagwell & Robert W. Staiger, 1997. "An Economic Theory of GATT," NBER Working Papers 6049, National Bureau of Economic Research, Inc.
  3. Bouet, Antoine & Debucquet, David Laborde, 2009. "The potential cost of a failed doha round:," IFPRI discussion papers 886, International Food Policy Research Institute (IFPRI).
  4. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195102680, October.
  5. van Tongeren, Frank & van Meijl, Hans & Surry, Yves, 2001. "Global models applied to agricultural and trade policies: a review and assessment," Agricultural Economics, Blackwell, Blackwell, vol. 26(2), pages 149-172, November.
  6. Mohamed Hedi Bchir & Sébastien Jean & David Laborde, 2005. "Binding Overhang and Tariff-Cutting Formulas," Working Papers 2005-18, CEPII research center.
  7. Antoine Bou�t & Yvan Decreux & Lionel Fontagné & Sébastien Jean & David Laborde, 2008. "Assessing Applied Protection across the World," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 850-863, November.
  8. Harry G. Johnson, 1965. "An Economic Theory of Protectionism, Tariff Bargaining, and the Formation of Customs Unions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 73, pages 256.
  9. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, Econometric Society, vol. 21(1), pages 128-140, April.
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Cited by:
  1. Antoine Bouet & David Laborde, 2010. "Eight years of Doha trade talks : where do we stand," Working Papers hal-00637589, HAL.
  2. repec:laf:wpaper:201003 is not listed on IDEAS

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