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Trade negotiations when market access matters

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  • Monika Mrazova

Abstract

This paper analyses GATT/WTO trade negotiations in an oligopolistic multi-country setting and identifies a new rationale for trade agreements. When set unilaterally, tariffs are inefficiently high, both for familiar terms-of-trade reasons, but also to restrict market access of foreign firms. Trade agreements neutralise both the terms-of-trade and the market-access externalities and help countries reach efficient tariff levels. The paper further studies various kinds of asymmetries in trade negotiations. It is shown that the multilateral negotiations system can sustain only a certain level of free-riding which suggests why multilateralism was successful in the past, but is currently stalling.

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  • Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:447
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    References listed on IDEAS

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    Cited by:

    1. Albornoz, Facundo & Calvo Pardo, Héctor F. & Corcos, Gregory & Ornelas, Emanuel, 2012. "Sequential exporting," Journal of International Economics, Elsevier, vol. 88(1), pages 17-31.
    2. Soegaard, Christain, 2013. "An Oligopolistic Theory of Regional Trade Agreements," Economic Research Papers 270542, University of Warwick - Department of Economics.

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    More about this item

    Keywords

    Trade negotiations; Trade liberalization; GATT/WTO; Multilateralism;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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