Subsidies, Disputes, and Enforcement: A Strategic Analysis of the Airbus-Boeing Case

Jasmina Karabegovic ()
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Jasmina Karabegovic: University of Graz, Austria

No 2025-05, Graz Economics Papers from University of Graz, Department of Economics

Abstract: This paper examines the role of international courts in international agreements, focusing on the WTO and its Dispute Settlement Body (DSB) in the Airbus-Boeing dispute. We model the court as an information provider in a repeated game setting with imperfect public monitoring. For patient governments (the players in this game), efficient agreements are self-enforcing, rendering the court redundant. When governments are less patient, only inefficient agreements are self-enforcing without courts. We provide equilibria in which access to a court enables governments to sustain (substantially) more efficient outcomes relative to the case without courts, regardless of how patient governments are.

Keywords: Repeated games; imperfect public monitoring; international trade; dispute resolution (search for similar items in EconPapers)
JEL-codes: C72 C73 D02 F13 (search for similar items in EconPapers)
Date: 2025-06
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