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Trade negotiations when market access matters

  • Monika Mrazova

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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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 447.

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Date of creation: 01 Sep 2009
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Handle: RePEc:oxf:wpaper:447
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