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GATT, Dispute Settlement and Cooperation


  • Dan Kovenock
  • Marie Thursby


This paper analyzes GATT and its dispute settlement procedure (DSP) in the context of a supergame model of international trade featuring both explicit and implicit agreements. An explicit agreement, such as GATT, may be violated at some positive cost in addition to retaliatory actions that might be induced by the violation. We interpret this cost as arising from 'international obligation," a phenomenon frequently mentioned in the legal literature on GATT. We focus on how international obligation affects two aspects of GAIT-DSP: unilateral retaliation and the effect of inordinate delays in the operation of DSP.

Suggested Citation

  • Dan Kovenock & Marie Thursby, 1992. "GATT, Dispute Settlement and Cooperation," NBER Working Papers 4071, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4071
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    References listed on IDEAS

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    7. Mayer, Wolfgang, 1981. "Theoretical Considerations on Negotiated Tariff Adjustments," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 135-153, March.
    8. Hungerford, T.L., 1990. "Gatt: A Cooperative Equilibrium In A Noncooperative Trading Regime?," Working Papers 262, Research Seminar in International Economics, University of Michigan.
    9. Ludema, Rodney D., 2001. "Optimal international trade agreements and dispute settlement procedures," European Journal of Political Economy, Elsevier, vol. 17(2), pages 355-376, June.
    10. Riezman, Raymond, 1991. "Dynamic tariffs with asymmetric information," Journal of International Economics, Elsevier, vol. 30(3-4), pages 267-283, May.
    11. Crawford, Vincent P, 1982. "A Theory of Disagreement in Bargaining," Econometrica, Econometric Society, vol. 50(3), pages 607-637, May.
    12. Chan, Kenneth S., 1988. "Trade negotiations in a Nash bargaining model," Journal of International Economics, Elsevier, vol. 25(3-4), pages 353-363, November.
    13. Brown, Fred & Whalley, John, 1980. "General Equilibrium Evaluations of Tariff-Cutting Proposals in the Tokyo Round and Comparisons with More Extensive Liberalisation of World Trade," Economic Journal, Royal Economic Society, vol. 90(363), pages 838-866, December.
    14. repec:fth:michin:262 is not listed on IDEAS
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