GATT-Think with Asymmetric Countries
We argue that, in the presence of asymmetric countries, a trade agreement that conforms to GATT’s reciprocity rule allows the (stronger) less trade dependent country to improve its welfare relative to both the free trade and the trade war. Conversely, the (weaker) more trade dependent country cannot reach the free trade welfare level under reciprocity, although its welfare improves relative to the trade war. Reciprocity is so unfavorable to the weaker country that it may be worse off under reciprocity than under the Nash bargaining solution, a ‘power-based’ approach to trade negotiations that reflects power asymmetries among trading partners. Our results question Bagwell and Staiger (1999, 2000)’s view of reciprocity as a rule that “serves to mitigate the influence of power asymmetries on negotiated outcomes”.
|Date of creation:||01 Sep 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Via Conservatorio 7 - 20122 Milano|
Phone: +39 02 503 16486
Fax: +39 02 503 16475
Web page: http://www.dagliano.unimi.it/
More information through EDIRC
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.:
- Kyle Bagwell & Robert W. Staiger, 2000.
NBER Working Papers
8005, National Bureau of Economic Research, Inc.
- Bagwell,K. & Staiger,R.W., 1998.
"An economic theory of GATT,"
15, Wisconsin Madison - Social Systems.
- Kyle Bagwell & Robert W. Staiger, 1997.
"Reciprocity, Non-discrimination and Preferential Agreements in the Multilateral Trading System,"
NBER Working Papers
5932, National Bureau of Economic Research, Inc.
- Bagwell, Kyle & Staiger, Robert W., 2001. "Reciprocity, non-discrimination and preferential agreements in the multilateral trading system," European Journal of Political Economy, Elsevier, vol. 17(2), pages 281-325, June.
- Mayer, Wolfgang, 1981. "Theoretical Considerations on Negotiated Tariff Adjustments," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 135-53, March.
- Paul R. Krugman, 1991.
"The move toward free trade zones,"
Federal Reserve Bank of Kansas City, issue Nov, pages 5-25.
- Paul R. Krugman, 1991. "The move toward free trade zones," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 7-58.
- Giovanni Maggi, 1999. "The Role of Multilateral Institutions in International Trade Cooperation," American Economic Review, American Economic Association, vol. 89(1), pages 190-214, March.
- Giovanni Maggi & Andres Rodriguez-Clare, 1998.
"The Value of Trade Agreements in the Presence of Political Pressures,"
Journal of Political Economy,
University of Chicago Press, vol. 106(3), pages 574-601, June.
- Maggi, G & Rodriguez-Clare, A, 1996. "The Value of Trade Agreements in the Presence of Political Pressures," Papers 180, Princeton, Woodrow Wilson School - Public and International Affairs.
- McLaren, John, 1997. "Size, Sunk Costs, and Judge Bowker's Objection to Free Trade," American Economic Review, American Economic Association, vol. 87(3), pages 400-420, June.
- John Kennan & Raymond Riezman, 2013.
"Do Big Countries Win Tariff Wars?,"
World Scientific Book Chapters,
in: International Trade Agreements and Political Economy, chapter 4, pages 45-51
World Scientific Publishing Co. Pte. Ltd..
- Eric W. Bond & Jee-Hyeong Park, 2002. "Gradualism in Trade Agreements with Asymmetric Countries," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 379-406.
- Baldwin, Richard, 1997.
"The Causes of Regionalism,"
CEPR Discussion Papers
1599, C.E.P.R. Discussion Papers.
- Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
- Carlo Perroni & John Whalley, 2000.
"The new regionalism: trade liberalization or insurance?,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 33(1), pages 1-24, February.
- Carlo Perroni & John Whalley, 1994. "The New Regionalism: Trade Liberalization or Insurance?," NBER Working Papers 4626, National Bureau of Economic Research, Inc.
- Kyle Bagwell & Robert W. Staiger, 1996.
"Reciprocal Trade Liberalization,"
NBER Working Papers
5488, National Bureau of Economic Research, Inc.
- Kyle Bagwell & Robert W. Staiger, 1996. "Reciprocal Trade Liberalization," Discussion Papers 1150, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bagwell, K. & Staiger, R.W., 1996. "Reciprocal Trade Liberalization," Working papers 9602, Wisconsin Madison - Social Systems.
- Park, Jee-Hyeong, 2000. "International trade agreements between countries of asymmetric size," Journal of International Economics, Elsevier, vol. 50(2), pages 473-495, April.
- Michalopoulos, Constantine, 1999. "Trade policy and market access issues for developing countries : implications for the Millennium Round," Policy Research Working Paper Series 2214, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:csl:devewp:175. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chiara Elli)
If references are entirely missing, you can add them using this form.