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Multilateral tariff cooperation under fairness and reciprocity

Costas Hadjiyiannis (), Doruk İriş and Chrysostomos Tabakis ()
Authors registered in the RePEc Author Service: Doruk İriş ()

Canadian Journal of Economics, 2012, vol. 45, issue 3, 925-941

Abstract: This paper explores the impact of fairness and reciprocity on multilateral tariff cooperation. Reciprocal countries reward kind behaviour (positive reciprocity), but retaliate against countries behaving unkindly (negative reciprocity). We demonstrate that reciprocal countries that are moderately demanding from their trading partners regarding their commercial policy can support a greater degree of cooperation than self-interested ones. However, when only very liberal import policies are considered fair, then reciprocity could have a detrimental effect on multilateral tariff cooperation.Thus, our model provides a novel perspective on the role of expectations in trade negotiations.

JEL-codes: F13 D63 (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:cje:issued:v:45:y:2012:i:3:p:925-941