Trade Agreements as Endogenously Incomplete Contracts

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

No 12745, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D02 F1 F13 F15 F51 F53 F59 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2006-12
Note: ITI
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Related works:
Working Paper: Trade Agreements as Endogenously Incomplete Contracts (2007)
Working Paper: Trade Agreements as Endogenously Incomplete Contracts (2007)
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