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Quantitative Analysis of Multi-Party Tariff Negotiations

Kyle Bagwell, Robert Staiger () and Ali Yurukoglu

No 24273, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a model of international tariff negotiations to study the design of the institutional rules of the GATT/WTO. We embed a multi-sector model of trade between multiple countries into a model of inter-connected bilateral negotiations over tariffs. Using 1990 trade flows and tariff outcomes from the Uruguay Round of GATT/WTO negotiations, we estimate country-sector productivity levels, sector-level productivity dispersion, iceberg trade costs, and country-pair bargaining parameters. We use the estimated model to simulate an alternative institutional setting for multilateral tariff negotiations in which the most-favored-nation requirement is abandoned. We find that abandonment of the most-favored-nation requirement would result in inefficient over-liberalization of tariffs and a deterioration in world-wide welfare relative to the negotiated outcomes in the presence of the most-favored-nation requirement.

JEL-codes: F11 F13 L4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth and nep-int
Date: 2018-02
Note: IO ITI
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