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An Eclectic Negotiation Theory of Trade Policy Behaviour


  • Sophus Garfiel

    (University of Copenhagen Institute of Economics)

  • Ulrik Vestergaard Knudsen

    (University of Copenhagen Institute of Economics)


Economic theory and empirical studies consistently support the case for free trade. With such a point of departure, the difficulties concluding the Uruguay Round of trade negotiations and the widespread use of protectionist measures in general seem paradoxical. However, through the introduction of insights from political (public choice) theory and theories of international relations in an essentially economic framework, it is possible to develop a multi-disciplinary model of trade policy behaviour which allows for a liberalist as well as a protectionist pull in international trade negotiations. Trade cooperation becomes potentially conflictual when economic gains are translated into political utility at the country level. This transformation helps explain protectionist behaviour, since the economic gains are discounted through political concern over internal distribution and relative gains vis-a-vis other countries or trading poles. The model proves well suited for organising a wide variety of determinants of trade policy behaviour around a limited number of parameters. The most important of these determinants are analysed on the basis of Uruguay Round application of the model.

Suggested Citation

  • Sophus Garfiel & Ulrik Vestergaard Knudsen, 1997. "An Eclectic Negotiation Theory of Trade Policy Behaviour," Discussion Papers 97-17, University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:kuiedp:9717

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    References listed on IDEAS

    1. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
    2. Ian M. McDonald & Robert M. Solow, 1985. "Wages and Employment in a Segmented Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1115-1141.
    3. Bulow, Jeremy I & Summers, Lawrence H, 1986. "A Theory of Dual Labor Markets with Application to Industrial Policy,Discrimination, and Keynesian Unemployment," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 376-414, July.
    4. Holden, Steinar, 1988. " Local and Central Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 93-99.
    5. Neumark, David & Wascher, William, 1995. "Minimum-Wage Effects on School and Work Transitions of Teenagers," American Economic Review, American Economic Association, vol. 85(2), pages 244-249, May.
    6. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    7. Alan Manning, 1995. "How Do We Know That Real Wages Are Too High?," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1111-1125.
    8. Mark A. Roberts, & Karsten Staehr Torben Tranaes,, "undated". "Two-Stage Bargaining and Minimum Wages in a Dual Labour Market," Discussion Papers 97/4, University of Nottingham, School of Economics.
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    More about this item


    international relations; negotiations; political economy; protectionism; trade theory; trade policy; Uruguay Round; WTO;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations


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