Trade negotiations when market access matters

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Trade negotiations when market access matters

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Monika Mrazova

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Monika Mrazova

Abstract

This paper analyses GATT/WTO trade negotiations in an oligopolistic multi-country setting and identifies a new rationale for trade agreements. When set unilaterally, tariffs are inefficiently high, both for familiar terms-of-trade reasons, but also to restrict market access of foreign firms. Trade agreements neutralise both the terms-of-trade and the market-access externalities and help countries reach efficient tariff levels. The paper further studies various kinds of asymmetries in trade negotiations. It is shown that the multilateral negotiations system can sustain only a certain level of free-riding which suggests why multilateralism was successful in the past, but is currently stalling.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 447.

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Date of creation: 2009
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Handle: RePEc:oxf:wpaper:447

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Find related papers by JEL classification:
F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-09-19 (All new papers)
NEP-INT-2009-09-19 (International Trade)

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