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Should WTO dispute settlement be subsidized?

Author

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  • Wilckens, Sebastian

Abstract

This paper develops a model of the WTO dispute settlement process (DSP) to study the recent proposal by legal scholars to subsidize litigation costs. The high cost of litigation, so the argument, is a major obstacle for developing countries to using the DSP to enforce developed countries' compliance with WTO rules. The paper shows that this proposal may be misguided. In particular, a reduction of litigation costs may lead large countries to impose larger trade impediments where before they may have raised barriers only a little. Thus, a cost reduction may even weaken the smaller countries' position in the DSP. Moreover, the model sheds light on the structure of the dark figure of un-accused offenses, suggesting that the observed record of disputes notified to the WTO is systematically biased.

Suggested Citation

  • Wilckens, Sebastian, 2007. "Should WTO dispute settlement be subsidized?," University of Göttingen Working Papers in Economics 62, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:62
    as

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    References listed on IDEAS

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    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
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    5. Horn, Henrik & Mavroidis, Petros C & Nordström, Håkan, 1999. "Is The Use Of The WTO Dispute Settlement System Biased?," CEPR Discussion Papers 2340, C.E.P.R. Discussion Papers.
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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