An Economic Theory of the GATT: A Generalization
AbstractBagwell and Staiger (1999) conclude that the reason for governments to enter trade negotiation is the terms-of-trade externality, which creates an inefficiency in unilateral trade policies. To address this conclusion, the authors consider that protection may be motivated by many other objectives than just unilateral attempts at terns-of-trade improvements, including the desire to: (1) increase incomes (or prevent trade-driven losses) in import- competing countries; (2) increase employment; (3) improve the balance of trade. It may or may not be sensible for countries to increase tariffs for any of these reasons, but they do. In each case, trade agreements may be appealing to governments as a way to prevent an inefficiency that arises from unilateral trade policies. The justification for the GATT is that it restrains unilateral protection, regardless of its political or economic motivation. Moreover, this conclusion holds even if each country has a different motive for protection.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Western Ontario, Department of Economics in its series UWO Department of Economics Working Papers with number 9909.
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/department_working_papers.html
This paper has been announced in the following NEP Reports:
- NEP-ALL-1999-11-28 (All new papers)
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.:
- Kyle Bagwell & Robert W. Staiger, 1997.
"An Economic Theory of GATT,"
NBER Working Papers
6049, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.