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Multilateral tariff cooperation under fairness and reciprocity

Author

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  • Costas Hadjiyiannis
  • Doruk İriş
  • Chrysostomos Tabakis

Abstract

This paper explores the impact of fairness and reciprocity on multilateral tariff cooperation. Reciprocal countries reward kind behaviour (positive reciprocity), but retaliate against countries behaving unkindly (negative reciprocity). We demonstrate that reciprocal countries that are moderately demanding from their trading partners regarding their commercial policy can support a greater degree of cooperation than self-interested ones. However, when only very liberal import policies are considered fair, then reciprocity could have a detrimental effect on multilateral tariff cooperation.Thus, our model provides a novel perspective on the role of expectations in trade negotiations.

Suggested Citation

  • Costas Hadjiyiannis & Doruk İriş & Chrysostomos Tabakis, 2012. "Multilateral tariff cooperation under fairness and reciprocity," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 925-941, August.
  • Handle: RePEc:cje:issued:v:45:y:2012:i:3:p:925-941
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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