Coercive Trade Policy

Vincent Anesi and Giovanni Facchini

American Economic Journal: Microeconomics, 2019, vol. 11, issue 3, 225-56

Abstract: Coercion is used by one government (the "sender") to influence the trade practices of another (the "target"). We build a two-country trade model in which coercion can be exercised unilaterally or channeled through a "weak" international organization without enforcement powers. We show that unilateral coercion may be ineffective because signaling incentives lead the sender to demand a concession so substantial to make it unacceptable to the target. If the sender can instead commit to the international organization's dispute settlement mechanism, then compliance is more likely because the latter places a cap on the sender's incentives to signal its resolve.

JEL-codes: D74 D82 F12 F53 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mic.20170085
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Coercive Trade Policy (2015)
Working Paper: Coercive Trade Policy (2014)
Working Paper: Coercive Trade Policy
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