Carrots, Sticks, and International Externalities

H.F. Chang

Working Papers from Georgetown University Law Center

Abstract: Dispute-settlement panels of a General Agreement on Tariffs and Trade (GATT), as well as the GATT Secretariat, have condemned the use of trade restrictions by some countries to induce other countries to protect the global environment. The GATT Secretariat has recommended that countries rely on "carrots" rather than "sticks"to induce the participation of other countries in multilateral environmental agreements. This article presents a formal model of a signaling game the indicates that the type of "carrots only" regime suggested by the GATT Secretariat would create perverse incentives.

Keywords: INTERNATIONAL; TRADE (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Pages: 23 pages
Date: 1997
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:geolaw:97-13

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