On the Efficiency of Retaliation Rules in International Trade

Victor Ginsburgh and Shlomo Weber

Annals of Economics and Statistics, 1997, issue 47, 51-63

Abstract: Though retaliation to discriminatory measures taken by a trading partner are made possible by international treaties (GATT and WTO in particular), it is rarely used. We give theoretical reasons for which this has been the case. We also show that the retaliation mechanism which is built into the GATT-WTO rules prevents tariff wars, but does not necessarily lead to free trade. We provide an alternative retaliation rule which yields free trade as the unique equilibrium of the tariff game.

Date: 1997
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Working Paper: On the efficiency of retaliation rules in international trade (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:1997:i:47:p:51-63

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