Breach, Remedies and Dispute Settlement in Trade Agreements

Giovanni Maggi and Robert Staiger

No 15460, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide a simple but novel model of trade agreements that highlights the role of transaction costs, renegotiation and dispute settlement. The model allows us to characterize the appropriate remedy for breach and whether the agreement should be structured as a system of "property rights" or "liability rules." We then study how the optimal rules depend on the underlying economic and contracting environment. Our model also delivers predictions about the outcome of trade disputes, and in particular about the propensity of countries to settle early versus "fighting it out."

JEL-codes: D02 D86 F13 K12 K33 (search for similar items in EconPapers)
Date: 2009-10
New Economics Papers: this item is included in nep-int
Note: ITI
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Citations: View citations in EconPapers (4)

Published as “The Role of Dispute Settlement Proc edures in International Trade Agreements,” The Quarterly Journal of Economics , vol. 126(1), pp. 475 - 515, February 2011 (with Robert Staiger).

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Related works:
Working Paper: Breach, Remedies and Dispute Settlement in Trade Agreements (2009)
Working Paper: Breach, Remedies and Dispute Settlement in Trade Agreements (2009)
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