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Quantitative Analysis of Multi-Party Tariff Negotiations

Author

Listed:
  • Kyle Bagwell
  • Robert W. Staiger
  • Ali Yurukoglu

Abstract

This paper develops a model of international tariff negotiations to study the design of the institutional rules of the GATT/WTO. We embed a multi-sector model of trade between multiple countries into a model of inter-connected bilateral negotiations over tariffs. Using 1990 trade flows and tariff outcomes from the Uruguay Round of GATT/WTO negotiations, we estimate country-sector productivity levels, sector-level productivity dispersion, iceberg trade costs, and country-pair bargaining parameters. We use the estimated model to simulate an alternative institutional setting for multilateral tariff negotiations in which the most-favored-nation requirement is abandoned. We find that abandonment of the most-favored-nation requirement would result in inefficient over-liberalization of tariffs and a deterioration in world-wide welfare relative to the negotiated outcomes in the presence of the most-favored-nation requirement.

Suggested Citation

  • Kyle Bagwell & Robert W. Staiger & Ali Yurukoglu, 2018. "Quantitative Analysis of Multi-Party Tariff Negotiations," NBER Working Papers 24273, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24273
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    Cited by:

    1. Harstad, Bård, 2023. "Pledge-and-review bargaining," Journal of Economic Theory, Elsevier, vol. 207(C).
    2. Cecilia Carvalho & Daniel Monte & Emanuel Ornelas, 2025. "Equilibrium Trade Regimes: Power- vs. Rules-Based," CESifo Working Paper Series 12203, CESifo.
    3. Kim, Dongin & Steinbach, Sandro & Zurita, Carlos, 2024. "Deep trade agreements and agri-food global value chain integration," Food Policy, Elsevier, vol. 127(C).
    4. Galle, Simon & Lorentzen, Linnea, 2024. "The unequal effects of trade and automation across local labor markets," Journal of International Economics, Elsevier, vol. 150(C).
    5. Caliendo, Lorenzo & Feenstra, Robert C., 2024. "Foundation of the small open economy model with product differentiation," Journal of International Economics, Elsevier, vol. 150(C).
    6. Duan, Yuwan & Ji, Ting & Lu, Yi & Wang, Siying, 2021. "Environmental regulations and international trade: A quantitative economic analysis of world pollution emissions," Journal of Public Economics, Elsevier, vol. 203(C).
    7. Peng, Guohua & Zhao, Xiaoling, 2025. "Effects of export growth on the location choices of migrant workers: Evidence from China," China Economic Review, Elsevier, vol. 92(C).
    8. de Souza, Gustavo & Hu, Naiyuan & Li, Haishi & Mei, Yuan, 2024. "(Trade) War and peace: How to impose international trade sanctions," Journal of Monetary Economics, Elsevier, vol. 146(C).
    9. Gustavo de Souza & Naiyuan Hu & Haishi Li & Yuan Mei, 2023. "(Trade) War and Peace: How to Impose International Trade Sanctions," CESifo Working Paper Series 10477, CESifo.
    10. Aaditya Mattoo & Michele Ruta & Robert W. Staiger, 2024. "Geopolitics and the World Trading System," NBER Working Papers 33293, National Bureau of Economic Research, Inc.
    11. Ricardo Reyes-Heroles & Sharon Traiberman & Eva Van Leemput, 0. "Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 0, pages 1-53.
    12. Wang, Xuejun & Cao, Zhi & Xu, Liang, 2025. "Economic impact of agricultural trade liberalization under the CPTPP and China’s policy response," Journal of Asian Economics, Elsevier, vol. 100(C).
    13. Maximilian Blesch & Philipp Eisenhauer, 2023. "Robust Decision-Making under Risk and Ambiguity," Rationality and Competition Discussion Paper Series 463, CRC TRR 190 Rationality and Competition.
    14. Ana Maria Santacreu & Michael Sposi & Jing Zhang, 2021. "What Determines State Heterogeneity in Response to US Tariff Changes?," Working Papers 2021-007, Federal Reserve Bank of St. Louis, revised 08 Mar 2023.
    15. Joseph S Shapiro, 2021. "The Environmental Bias of Trade Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(2), pages 831-886.
    16. Gustavo de Souza & Naiyuan Hu & Haishi Li & Yuan Mei, 2022. "(Trade) War and Peace: How to Impose International Trade Sanctions," Working Paper Series WP 2022-49, Federal Reserve Bank of Chicago.
    17. Ricardo Reyes-Heroles & Sharon Traiberman & Eva Van Leemput, 2020. "Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(3), pages 456-508, September.
    18. Bond, Eric W. & Duan, Yuwan & Ji, Ting & Lu, Yi, 2023. "Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 542-560.
    19. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    20. Bagwell, Kyle & Staiger, Robert W. & Yurukoglu, Ali, 2020. "“Nash-in-Nash” tariff bargaining," Journal of International Economics, Elsevier, vol. 122(C).
    21. Aaditya Mattoo & Robert W Staiger, 2020. "Trade wars: What do they mean? Why are they happening now? What are the costs?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(103), pages 561-584.

    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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