Screening for losers: Trade institutions and information

Jason S. Davis ()
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Jason S. Davis: University of Pennsylvania

The Review of International Organizations, 2022, vol. 17, issue 1, No 1, 37 pages

Abstract: Abstract Trade law scholars have often argued that international institutions can serve a useful domestic political role by providing a constraint against domestic demands for protection. In this paper, I identify a new way in which such institutions and their particular features can be valuable to governments: namely, that they can provide useful information about domestic political groups. While governments are responsible for the administration of most legal trade-related actions, the information that governments need to determine which actions to pursue is often the private information of the firms and interest groups that are lobbying for these actions, and there are significant incentives for such groups to misrepresent this information. This paper uses a formal model to demonstrate that governments can use the multitude of legal options available to them to screen between domestic groups for those with the strongest cases; a selection process which can help to explain, amongst other things, why trade remedies tend to be structured around meeting criteria instead of as “efficient breaches” requiring compensation and why disputes pursued via the WTO have such a high rate of success (approximately 90% for cases that reach the panel stage).

Keywords: Trade; International institutions; Game theory; Trade remedies; Information; Politics; Interest groups; Screening; WTO (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11558-020-09409-7

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