“GATT‐think” with Asymmetric Countries*

Paolo Epifani () and Juliette Vitaloni

Review of International Economics, 2006, vol. 14, issue 3, 427-444

Abstract: We argue that a trade agreement which conforms to GATT’s reciprocity rule benefits the (stronger) less trade‐dependent country at the expense of the (weaker) more trade‐dependent country. Reciprocity is so unfavorable to the weaker country that it may be worse off under reciprocity than under the Nash‐ bargaining solution, a “power‐based” approach to trade negotiations that reflects power asymmetries among trading partners. Our results question Bagwell and Staiger’s (1999, 2000) view of reciprocity as a rule that “serves to mitigate the influence of power asymmetries on negotiated outcomes.”

Date: 2006
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https://doi.org/10.1111/j.1467-9396.2006.00654.x

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Working Paper: ‘GATT-Think’ with Asymmetric Countries (2003)
Working Paper: GATT-Think with Asymmetric Countries (2003)
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