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Contesting an international trade agreement

Matthew Cole (), James Lake () and Benjamin Zissimos ()

Journal of International Economics, 2021, vol. 128, issue C

Abstract: We develop a new theoretical political economy framework called a ‘parallel contest’ that emphasizes the political fight over trade agreement (TA) ratification within countries. TA ratification is inherently uncertain in each country because anti- and pro-trade interests contest each other to influence their own government's ratification decision. As in the terms-of-trade theory of TAs, the TA removes terms-of-trade externalities created by unilateral tariffs. But, a TA also creates new terms-of-trade and local-price externalities in our framework due to endogenous ratification uncertainty combined with the requirement that each country ratify the TA for it to go ahead. Thus, reciprocal TA liberalization fails to eliminate all terms-of-trade externalities.

Keywords: Contest; International agreement; Lobbying; Tariffs; Trade agreement (search for similar items in EconPapers)
JEL-codes: C72 D72 F13 (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Contesting an international trade agreement (2020) Downloads
Working Paper: Contesting an International Trade Agreement (2018) Downloads
Working Paper: Contesting an international trade agreement (2018) Downloads
Working Paper: Contesting an International Trade Agreement (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:128:y:2021:i:c:s0022199620301252

DOI: 10.1016/j.jinteco.2020.103410

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