Limited Cross-retaliation and Lengthy Delays in International Dispute Settlement
We aim to provide a compelling explanation about why the World Trade Organi- zation (WTO) permits retaliation only after a lengthy delay and, furthermore, why it usually rejects requests for retaliation (or a reciprocal withdrawal of concessions) in other related international agreements. We take a dynamic mechanism design approach and compare the welfare effects between same and cross-sector retaliation with as well as without, delay. We show that the same-sector retaliation mechanism generates higher welfare and supports a higher self-enforcing level of cooperation than does the cross-sector retaliation mechanism. This result holds irrespective of whether there is a time lag between the initial violation and the corresponding retaliatory action. Furthermore, welfare is higher when retaliation is administered with a delay.
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- Kyle Bagwell, 2009. "Self-Enforcing Trade Agreements and Private Information," NBER Working Papers 14812, National Bureau of Economic Research, Inc.
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- Chad P. Bown, 2004. "On the Economic Success of GATT/WTO Dispute Settlement," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 811-823, August.
- Kyle Bagwell & Robert Staiger, 1997. "Collusion Over the Business Cycle," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 82-106, Spring.
- Bagwell, K. & Staiger, R.W., 1995. "Collusion Over the Business Cycle," Working papers 9504, Wisconsin Madison - Social Systems.
- Kyle Bagwell & Robert W. Staiger, 1995. "Collusion over the Business Cycle," NBER Working Papers 5056, National Bureau of Economic Research, Inc.
- Kyle Bagwell & Robert W. Staiger, 1995. "Collusion Over the Business Cycle," Discussion Papers 1118, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Kyle Bagwell & Robert W. Staiger, 1989. "A Theory of Managed Trade," Discussion Papers 801, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Robert Z. Lawrence, 2003. "Crimes and Punishments?: Retaliation under the WTO," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 372, November.
- Richard Chisik & Harun Onder, 2010. "Does Limited Punishment Limit the Scope for Cross-Retaliation?," Working Papers 025, Ryerson University, Department of Economics, revised Jul 2016.
- Chad P. Bown & Bernard M. Hoekman, 2005. "WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector," Journal of International Economic Law, Oxford University Press, vol. 8(4), pages 861-890, December.
- Beshkar, Mostafa, 2010. "Trade skirmishes safeguards: A theory of the WTO dispute settlement process," Journal of International Economics, Elsevier, vol. 82(1), pages 35-48, September. Full references (including those not matched with items on IDEAS)
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