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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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File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper447.pdf
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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
Handle: RePEc:oxf:wpaper:447
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  18. Carraro, Carlo & Marchiori, Carmen & Oreffice, Sonia, 2004. "Endogenous Minimum Participation in International Environmental Treaties," CEPR Discussion Papers 4281, C.E.P.R. Discussion Papers.
  19. Taiji Furusawa & Hideo Konishi, 2003. "A Welfare Decomposition in Quasi-Linear Economies," Boston College Working Papers in Economics 569, Boston College Department of Economics.
  20. Sang-Seung, Yi, 1996. "Endogenous formation of customs unions under imperfect competition: open regionalism is good," Journal of International Economics, Elsevier, vol. 41(1-2), pages 153-177, August.
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  23. Michael Tomz & Judith L. Goldstein & Douglas Rivers, 2007. "Do We Really Know That the WTO Increases Trade? Comment," American Economic Review, American Economic Association, vol. 97(5), pages 2005-2018, December.
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