Trade Agreements as Endogenously Incomplete Contracts

Henrik Horn (), Giovanni Maggi and Robert W. Staiger ()

No 6037, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements.

Keywords: endogenously incomplete contracts; GATT; trade agreement; WTO (search for similar items in EconPapers)
JEL-codes: D86 F13 K33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-law
Date: Written
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Related works:
Working Paper: Trade Agreements as Endogenously Incomplete Contracts (2007)
Working Paper: Trade Agreements as Endogenously Incomplete Contracts (2006)
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