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Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain

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Author Info
Ignatius J. Horstmann
James R. Markusen
Jack Robles

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Abstract

There has been much discussion about what issues should be included in international 'trade' negotiations. Different countries, firms and activists groups have quite different views regarding which items should (or should not) be negotiated together. Proposals run the gamut from no linking to linking trade with investment, the environment, labor and human-rights codes. This paper provides a formal framework for analyzing these questions. It employs a two-country, two-issue bargaining model and contrasts outcomes when issues are negotiated separately and when they are linked in some form. A key concept is 'comparative interest', analogous to Ricardian comparative advantage. We provide general results and note, in particular, where a country can benefit by agreeing to include an agenda item for which, when viewed by itself, the country does not receive a positive payoff.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8347.

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Date of creation: Jun 2001
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Handle: RePEc:nbr:nberwo:8347

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Find related papers by JEL classification:
F2 - International Economics - - International Factor Movements and International Business
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

References listed on IDEAS
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.:

  1. Conconi, P. & Perroni, C., 2000. "Issue Linkage and Issue Tie-in in Multilateral Negotiations," The Warwick Economics Research Paper Series (TWERPS) 558, University of Warwick, Department of Economics. [Downloadable!]
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  2. Inderst, Roman, 2000. "Multi-issue Bargaining with Endogenous Agenda," Games and Economic Behavior, Elsevier, vol. 30(1), pages 64-82, January. [Downloadable!] (restricted)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Blackwell Publishing, vol. 56(1), pages 59-76, January. [Downloadable!] (restricted)
  5. Kyle Bagwell & Robert W. Staiger, 1999. "Domestic Policies, National Sovereignty and International Economic Institutions," NBER Working Papers 7293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June. [Downloadable!] (restricted)
  7. Lisandro Abrego & Carlo Perroni & John Whalley & Randall M. Wigle, 1997. "Trade and Environment: Bargaining Outcomes from Linked Negotiations," NBER Working Papers 6216, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Lutz-Alexander Busch & Ignatius Horstmann, 1999. "Endogenous Incomplete Contracts: A Bargaining Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 956-975, August. [Downloadable!] (restricted)
  9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April. [Downloadable!] (restricted)
  10. Busch, Lutz-Alexander & Horstmann, Ignatius J, 1997. "Bargaining Frictions, Bargaining Procedures and Implied Costs in Multiple-Issue Bargaining," Economica, London School of Economics and Political Science, vol. 64(256), pages 669-80, November. [Downloadable!] (restricted)
  11. Fershtman, Chaim, 1990. "The importance of the agenda in bargaining," Games and Economic Behavior, Elsevier, vol. 2(3), pages 224-238, September. [Downloadable!] (restricted)
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  12. Copeland, Brian R & Taylor, M Scott, 1995. "Trade and Transboundary Pollution," American Economic Review, American Economic Association, vol. 85(4), pages 716-37, September. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2002. "Pros and Cons of Linking Trade and Labor Standards," Working Papers 477, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  2. Nuno Limão, 2002. "Trade policy, cross-border externalities and lobbies: do linked agreements enforce more cooperative outcomes?," International Trade 0206002, EconWPA, revised 28 Jul 2002. [Downloadable!]
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  3. Pierpaolo Battigalli & Giovanni Maggi, 2003. "International agreements on product standards: an incomplete-contracting theory," Working Papers 229, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
    Other versions:
  4. Edwin Lai, & Larry D. Qiu, 2002. "The North's Intellectual Property Rights Standard for the South?," Trade Working Papers 203, East Asian Bureau of Economic Research. [Downloadable!]
    Other versions:
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