deregulation and regional specialization evidence from canadian agriculture for about 70 years the canadian wheat board cwb was one of the world s largest export single desk state traders in agriculture until it was deregulated in 2012 and stripped of its marketing powers one of the main crops controlled by the cwb was barley we estimate the impact of the removal of the cwb s single desk on the spatial pattern of malting barley production in western canada we find that deregulation encouraged growers located closer to malt barley processing plants to increase production relative to growers located further from the plants this change in cropping patterns after deregulation can be explained by efficiency gains combined with transportation and handling cost savings deregulation et specialisation regionale l exemple de l agriculture canadienne pendant pres de soixante dix ans la commission canadienne du ble ccb representa l un des plus grands guichets uniques monopolistiques de negoce agricole dans le monde jusqu a sa dereglementation en 2012 date a laquelle elle perdit toutes ses prerogatives commerciales l une des principales cultures controlees par la ccb etait l orge nous avons evalue l impact de la suppression du guichet unique de la ccb sur la distribution geographique de la production d orge de brasserie dans l ouest canadien consecutivement a la dereglementation nous avons remarque que plus les producteurs etaient situes a proximite des usines de transformation d orge brassicole plus ils augmentaient leur production ce changement dans le systeme de culture posterieur a la dereglementation peut s expliquer par des gains en efficacite ainsi que des economies en matiere de couts de transport et de manutention

the role of multilateral institutions in international trade cooperation the world trade organization wfo lacks the power to directly enforce agreements it is therefore important to understand what role the wto can play to facilitate international cooperation and whether a multilateral institution can offer distinct advantages over a web of bilateral agreements this paper examines two potential benefits of a multilateral trade institution first verifying violations of the agreements and informing third parties thus facilitating multilateral reputation mechanisms second promoting multilateral trade negotiations rather than a web of bilateral negotiations the model suggests that a multilateral approach is particularly important when there are strong imbalances in bilateral trading relationships

is protection for sale evidence on the grossman helpman theory of endogenous protection grossman and helpman 1994 present a theory of endogenous protection by explicitly modeling government industry interactions for which mere black box models previously existed they obtain a ramsey pricing type solution to the provision of protection which emphasizes the role of inverse import penetration ratios and import elasticities on the lobbying side the model makes predictions about lobbying competition and lobbying spending according to deadweight costs from protection the model not only makes for richer theory in terms of rigor and elegance but its predictions are directly testable whether the grossman helman model stands up to real world data is investigated in this paper predictions from both the protection side and lobbying side are tested using cross sectional u s nontariff barrier data we also compare the second generation grossman helpman model with a more traditional specification our results call for serious consideration of this model in the political economy literature

endogenous free trade agreements and the multilateral trading system i evaluate in this paper the impact of free trade areas ftas on the world trading system i use an oligopolistic political economy model where the external tariffs of fta members as well as the decision to form ftas are endogenously determined in this context i show that ftas are primarily beneficial to the multilateral trading system this conclusion is based first upon the finding that ftas induce their member governments to lower their external tariffs and to do so deeply enough to enhance trade even between fta members and non members while this ensures gains for the latter in general fta members may not gain i show however that governments will endorse only welfare improving arrangements in spite of their political motivations as a result fta members benefit from ratified arrangements as well finally i find that ftas by reducing the role of special interests criteria in governments trade regime decisions also tend to enhance support for further liberalization at the multilateral level

do state trading exporters distort trade abstract in this paper we analyse the trade distorting effects of state trading enterprises stes which exist in some exporting countries because of these potential effects several countries have raised the issue of state enterprises in the doha round negotiations in the wto the belief is that stes in certain developed countries have trade effects which are equivalent to an export subsidy stes also exist in developing countries though since the aim of government policy may differ from the developed country case the trade distortion may be equivalent to an export tax we present a theoretical model that is sufficiently general to allow us to consider the case of exporting stes in developed and developing economies the model is calibrated with data on two examples of stes one typical of an ste in a developed country the other typical of an ste in a developing economy in each case we allow for differences in the nature of the ste s pay off function the overall conclusion is that stes do distort trade and the trade distortion effect is potentially significant

the clash of liberalizations preferential versus multilateral trade liberalization in the european union there has been an explosion in the number of preferential trade agreements in the past decade preferential trade agreements are characterized by liberalization with respect to only a few partners and thus they can potentially clash with and retard multilateral trade liberalization despite this important concern with preferential trade agreements there is almost no systematic evidence on whether they actually affect multilateral trade liberalization the authors model the effect of preferential trade agreements on multilateral trade liberalization and show that preferential trade agreements slow down multilateral trade liberalization unless they have a common external tariff and allow for internal transfers next they use detailed data on product level tariffs negotiated by the european union in the past two multilateral trade rounds to structurally estimate their model the authors confirm the main prediction the european union s preferential trade agreements have clashed with its multilateral trade liberalization and find that the effect is quantitatively significant moreover they also confirm several auxiliary predictions of the model and provide new evidence on the political economy determinants of multilateral liberalization in the european union

free trade agreements as dynamic farsighted networks in the presence of multilateral negotiations are free trade agreements ftas necessary for or will they prevent global free trade i answer this question using a dynamic farsighted model of network formation among asymmetric countries ultimately ftas prevent global free trade when there are two larger countries and one smaller country but ftas can be necessary for global free trade when there are two smaller countries and one larger country the model provides insights into the dynamics of recent real world negotiations and recent results in the literature on the empirical determinants of trade agreements jel c71 f12 f13

protection for sale the case of oligopolistic competition and interdependent sectors in grossman helpman s 1994 canonical protection for sale pfs model political competition among industry lobbies is driven purely by their interests as consumers this paper introduces demand linkages and oligopolistic competition into the pfs framework to address the rivalry among lobbies stemming from product substitutability it shows that increased substitutability weakens the interest groups incentives to lobby and reduces tariff distortions this may explain why empirical tests of pfs find surprisingly little impact of lobbies on the government s trade policy decision the paper also analyzes endogenous lobby formation suggesting that demand linkages may adversely affect the industry decision to organize resume proteger les ventes le cas de la concurrence oligopolistique et des secteurs interdependants dans le modele canonique de grossman helpman 1994 protection for sale pfs la concurrence politique entre lobbyistes est purement alimentee par leurs interets en tant que consommateurs ce texte presente dans ce cadre d analyse les enchainements de la demande et la concurrence oligopolistique pour prendre en compte la rivalite entre lobbyistes qui derive de la substituabilite des produits on montre qu une substituabilite accrue reduit l incitation des groupes d interets a faire du lobbying et reduit les distorsions tarifaires cela peut expliquer pourquoi les tests empiriques du modele pfs ont decouvert un impact etonnamment faible des lobbies sur les decisions des gouvernements dans le monde des politiques commerciales le texte analyse aussi la formation endogene des lobbies suggerant que les enchainements de la demande peuvent affecter negativement la decision de s organiser

bilateralism multilateralism and the quest for global free trade abstract we develop an equilibrium theory of trade agreements in which both the degree and the nature bilateral or multilateral of trade liberalization are endogenously determined to determine whether and how bilateralism matters we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis we find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements by contrast under symmetry both bilateralism and multilateralism yield global free trade

lobbying competition over trade policy competition between opposing lobbies is an important factor in the endogenous determination of trade policy this article investigates the consequences of lobbying competition between upstream and downstream producers the theoretical structure underlying the empirical analysis is the well known grossman helpman model of trade policy determination modified to account for the cross sectoral use of inputs itself a quantitatively significant phenomenon with around 50 of manufacturing output being used by other sectors rather than in final consumption our empirical results validate the theoretical predictions importantly accounting for lobbying competition also alters substantially estimates of the welfare mindedness of governments in setting trade policy

are global trade negotiations behind a fragmented world of gated globalization abstract we show that global trade negotiations can prevent global free trade in a simple model where global tariff negotiations precede sequential free trade agreements ftas we show fta formation can expand all the way to global free trade in the absence of global tariff negotiations but global free trade never emerges when global tariff negotiations precede fta formation this result arises precisely because global tariff negotiations successfully elicit concessions from negotiating countries moreover global tariff negotiations can produce a fragmented world of gated globalization where some countries form ftas that eliminate tariff barriers among themselves while outsiders continue facing higher tariffs

union membership in the united states 1973 1981 this paper reports estimates of union membership gathered from may current population surveys from 1973 to 1981 the authors present data by occupation industry selected states and smsas race gender and educational attainment the paper both extends and differs from that by freeman and medoff which presents unionism estimates for the private sector for 1968 75 to facilitate longitudinal analysis this paper reports three year moving averages of occupational and industry data and annual estimates of demographic classifications the data include public sector as well as private sector workers and they exclude workers not covered by the national labor relations act also the authors provide only union membership estimates not estimates on workers covered by union contracts this paper suggests that the percentage of all workers that are unionized in the united states remained fairly constant over the 1973 81 period

money demand and the effects of fiscal policies this paper reexamines the choice of the scale variable in the money demand function a variety of evidence suggests that consumer spending is a better scale variable than gnp changing the money demand specification along these lines can profoundly affect the standard keynesian analysis of a tax cut copyright 1986 by ohio state university press

endogenous growth and government debt the feasibility of the policy of perpetual debt financing given a particular path for expenditures and taxation has been questioned over the years sargent and wallace 17 argue that such a policy is not feasible in the sense that the debt gnp ratio will explode mccallum 8 and darby 2 argue that this policy will be feasible if and only if the long run growth rate of gnp exceeds the after tax real interest rate this particular condition was derived under the assumption of ricardian equivalence where the growth rate of gnp and the interest rate are exogenously given and are not affected by the path of debt miller and sargent 9 and weil 20 make the point that once the assumption of ricardian equivalence is dropped then simple comparisons of long run growth rates and interest rates are not sufficient to determine stability tirole 19 and o connell and zeldes 10 demonstrate in diamond s 3 model without ricardian equivalence that ponzi games such as this are feasible if and only if the economy is dynamically inefficient without debt all of these studies assume that the long run growth rate of gnp is exogenously given this assumption is particularly strong in the absence of ricardian equivalence in a separate literature a new generation of equilibrium growth models has recently been developed with positive sustained growth in the long run equilibrium in these models long run growth is endogenously determined rather than being imposed on the model as some exogenously given process 7 11 12 14 15 1 all of these models find some way of introducing increasing returns to scale into the neoclassical growth model and yet preserving the fact that it can be interpreted as a decentralized equilibrium this paper considers the feasibility of perpetual debt financing in an economy where the growth rate of gnp is endogenously determined and is a function of debt levels the model of endogenous growth presented here is a modified version of the one given in prescott and boyd 12 this particular model is chosen for two reasons first agents live for finite lengths of time so ricardian equivalence will not hold in general in this model also the production function is linear in the capital stock as will become clear below this implies that the equilibrium paths of the state variables can be characterized as first order linear difference equations

politically realistic objective functions and trade policy profs and tariffs abstract this paper demonstrates a mathematical correspondence between the deus ex machina tariff formation approach and political economy approach the correspondence implies that the tariff chosen by lobbying influenced policy makers will be equivalent to a tariff chosen by a deus ex machina government that gives too much weight to profits this result allows many political economy issues to be addressed in the simple framework of a deus ex machina government which faces a politically realistic objective function prof

feasible multilateralism and the effects of regionalism recent research has underlined the efficiency of the gatt wto rules from the standpoint of politically motivated governments emphasizing that the current multilateral rules are capable of delivering a politically efficient equilibrium such an equilibrium is however economically inefficient global free trade in particular is generally unattainable even in a fully cooperative world provided that governments have distributive motivations in such a context we show that regional trade agreements can help move the world towards a welfare superior equilibrium the reason is that as members of regional trade agreements lower trade barriers against one another they are induced to reduce their multilateral tariff sa s well once we account for these endogenous changes and only then we find that regionalism can raise world welfare even in a fully cooperative but political world we also find however that members are likely to gain too much from regional integration thereby harming outsiders

us non tariff barriers as privately provided public goods abstract the endogenous theory of protection is empirically investigated in a different light rather than emphasizing the determinants of the supply of protection the present study emperically investigates the micro level demand side behavior of firms predictions from bergstrom et al journal of public economics 1986 2 25 49 about the private provision of public goods provide a theoretical foundation for such a demand side econometric investigation if rational lobbies are observed to behave in a manner consistent with the theory of the private provision of public goods then it must be the case that they are able to influence trade policy the econometric specification is also consistent with the special interest models of olson the logic of collective action public goods and the theory of groups harvard university press 1965 stigler bell journal of economics and management science 1971 2 137 146 baron quarterly journal of economics 1989 1 45 72 and grossman and helpman american economic review 1994 84 833 850 hence evidence presented in this study from the demand side behavior of firms has the deeper implication that it validates the theory of endogenous protection an issue that is still controversial among trade theorists

the combination of gravity and welfare approaches for evaluating nontariff measures this article explores the link between gravity and welfare frameworks for measuring the impact of nontariff measures first an analytical approach suggests how to combine a gravity equation with a partial equilibrium model to determine the welfare impact of nontariff measures second an empirical application focuses on the effects of a standard that caps antibiotic residues in crustaceans in the united states the european union canada and japan while the econometric estimation of the gravity equation reports a negative impact on imports welfare evaluations show that in most cases a stricter standard leads to an increase in both domestic and international welfare

are preferential trade agreements with non trade objectives a stumbling block for multilateral liberalization in many preferential trade agreements ptas countries exchange not only reductions in trade barriers but also cooperation in non trade issues such as labor and environmental standards intellectual property etc we provide a model of ptas motivated by cooperation in non trade issues and analyze its implications for global free trade and welfare we find that such ptas increase the cost of multilateral tariff reductions and thus cause a stumbling block to global free trade this occurs because multilateral tariff reductions decrease the threat that can be used in ptas and thus the surplus that can be extracted from them by explicitly modeling the interaction between preferential and multilateral negotiations we derive a testable prediction and provide novel econometric evidence that supports the model s key prediction the welfare analysis shows that the current wto rules allowing this type of ptas may be optimal for economically large countries thus the model can predict the rules we observe we also analyze alternative rules that constitute a pareto improvement

the trade and welfare effects of state trading in china with reference to cofco the use of state trading to manage imports and exports has been a long standing feature of china s agricultural trade regime while the use of state trading was modified by china s accession to the wto state trading still dominates for some commodities even though there have been recent attempts to diminish its importance in this paper we analyse the potential trade distorting effect of cofco on market access and export competition by drawing on some recent research on the impact of stes on agricultural trade by using a calibrated model of china s imports of wheat and exports of maize we are able to quantify the size of the trade distortions

is non monetarist arithmetic just as unpleasant what should the central bank do if the fiscal authority persists in running a deficit if the monetarist policy prescription of bond financing deficits is adopted mccallum 8 and others have shown that the real growth rate must exceed the after tax real interest rate if macroeconomic instability is to be avoided analysts such as miller and sargent 10 and burbidge 1 doubt whether this condition is met and thus argue in favor of greater flexibility in the rate of monetary growth but will that lead to instability as well is the requirement for a unique solution and macroeconomic convergence just as stringent under the non monetarist option of money financed deficits if so monetarists can deflect criticism of their financing option from those who argue money financing is preferred on feasibility grounds this paper addresses this question and concludes that money financing involves much more pleasant arithmetic than does bond financing analysis is given for both closed and small open economies considering what is available in the existing literature the open economy extension may be the most important contribution of the paper in addition to addressing the feasibility of alternative financing options we use the model to comment on the welfare cost of inflation in an open economy environment the feasibility of money financed deficits has recently drawn renewed attention among macroeconomists erbas 2 using a model which imposes the ricardian equivalence hypothesis and assumes no growth concludes that money financing is preferred as an automatic stabilizer as it offers greater short run stability of the level of income scarth 14 comes to the same conclusion using a model which does not impose the ricardian equivalence hypothesis but which allows economic growth liviatan 6 and mitchell 11 investigate the feasibility of bond and money financing using long run models of a closed economy in which government bonds constitute a part of net wealth in this paper we consider both open and closed economy long run models and we adopt the ricardian equivalence hypothesis we emphasize ricardian equivalence since most monetarists are comfortable with this assumption thus unlike the previous long run studies we examine the feasibility of monetarist versus non monetarist financing options using a model acceptable to most monetarists this is important when the results do not support monetarism the remainder of the paper is organized as follows the closed economy analysis is given in section ii the open economy case is discussed in section iii and concluding remarks are contained in section iv

multilateralism and the endogenous formation of preferential trade agreements abstract this paper examines the interaction between preferential trade agreements ptas and multilateral tariff reduction in a model of imperfect competition a growing literature finds that the formation of ptas alters the incentives for and the sustainability of multilateral tariff reduction we show that the causation is not one sided multilateral tariff reduction also affects the formation of ptas specifically tariff reduction enhances the incentives to form a pta and increases the likelihood that it is self enforcing thus each round of multilateral tariff reduction should lead to a new wave of ptas this may help to explain the current trend towards regionalism

deregulation as welfare reducing trade reform the case of the australian wheat board state trading enterprises are distinguishable from private commercial firms by the nature of their exclusive rights and objectives deregulation of the australian wheat board is used to illustrate the effects of these rights and objectives on trade and welfare theoretical models are specified and the effects measured through calibrated partial equilibrium models it was found that the successive deregulations of the australian wheat board caused it to switch from being equivalent to an export subsidy to today being equivalent to an export tax at the same time deregulation has not necessarily been welfare enhancing

tariff binding and overhang theory and evidence abstract most market access commitments under the wto are in the form of bindings on applied tariff rates we observe two important regularities in the data first applied tariffs are often lower than the bound tariffs providing governments with substantial policy flexibility second the extent of flexibility varies substantially across sectors and countries in a sharp contrast to the prediction of standard trade agreement models we observe a strong negative correlation between tariff commitments and measures of import market power we model the trade off between discipline and flexibility in the design of trade agreements and argue that recognizing this trade off is the key to explain the observed patterns in the tariff binding commitments and applied tariffs under the wto

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

can bilateral trade agreements help induce free trade there has been growing debate about whether bilateral trade agreements are damaging multilateral efforts to eliminate barriers to international trade this paper develops a model in which trading blocs always charge optimal tariffs and make trade agreements based on strategic considerations we ask a very simple question does the fact that trading blocs can form bilateral trade agreements make free trade less likely to occur the answer is that it depends on the size distribution of the trading blocs if there is one large trading bloc along with some smaller ones then bilateral trade agreements allow the smaller trading blocs to coalesce and block the monopoly power of large trading blocs in this case bilateral trade agreements facilitate the attainment of free trade not allowing customs unions leads to more not less protection if trading blocs are of roughly equivalent size then bilateral trade agreements allow groups of trading blocs to more effectively monopolize world trade in which case they may make free trade less likely these results suggest that a policy that inhibits the formation of trading blocs may be harmful we also compute the welfare effects of trade agreements to get some idea of how empirically important these issues are

lobbying competition over trade policy counterlobbying over trade policy competition between opposing lobbies is an important factor in the endogenous determination of trade policy this paper investigates empirically the consequences of lobbying competition between upstream and downstream producers for trade policy the theoretical structure underlying the empirical analysis is the well known grossman helpman model of trade policy determination modified suitably to account for the cross sectoral use of inputs in production itself a quantitatively significant phenomenon with around 50 percent of manufacturing output being used by other sectors rather than in final consumption data from more than 40 countries are used in our analysis our empirical results validate the predictions of the theoretical model with lobbying competition importantly accounting for lobbying competition also alters substantially estimates of the welfare mindedness of governments in setting trade policy

multilateral tariff cooperation during the formation of customs unions abstract we study the implications of customs union formation for multilateral tariff cooperation we model cooperation in multilateral trade policy as self enforcing in that it involves balancing the current gains from deviating unilaterally from an agreed upon trade policy against the future losses from forfeiting the benefits of multilateral cooperation that such a unilateral defection would imply the early stages of the process of customs union formation are shown to alter this dynamic incentive constraint in a way that leads to a temporary honeymoon for liberal multilateral trade policies we find however that the harmony between customs unions and multilateral liberalization is temporary eventually as the full impact of the emerging customs union becomes felt a less favorable balance between current and future conditions re emerges and the liberal multilateral policies of the honeymoon phase cannot be sustained

false promise or false premise the experience of food and input market reform in eastern and southern africa abstract the literature on the effects of agricultural market reform in africa is sharply divided and inconsistent this article attempts to reconcile opposing viewpoints on the effects of food and input market policy reform in eastern and southern africa drawing from studies of ethiopia kenya malawi zambia and zimbabwe we argue that a major source of the controversy stems from assumptions that countries have actually moved to a liberalized market environment we find that many of the most fundamental elements of the reform programs either remain unimplemented were reversed within several years or were implemented in such a way as to negate private sector investment incentives a framework is developed for explaining why some countries have been able to liberalize their food and fertilizer markets while others have not these findings have implications for how donor assistance and policy oriented research can more constructively contribute to an improved policy environment

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

tariff bindings and the dynamic formation of preferential trade agreements abstract we show that multilateral tariff binding liberalization substantially impacts the nature and extent of preferential trade agreement pta formation first it shapes the nature of forces constraining expansion of free trade agreements ftas the constraining force is a free riding incentive of fta non members under relatively high bindings but an exclusion incentive of fta members under relatively low bindings second multilateral tariff binding liberalization shapes the role played by ptas in the attainment of global free trade initially tariff binding liberalization leads to custom union cu formation in equilibrium but in a way that undermines the pursuit of global free trade however further tariff binding liberalization leads to fta formation in equilibrium and in a way that facilitates the attainment of global free trade our theoretical analysis also has implications regarding recent empirical discussions over the relative merits of ftas versus cus

state trading enterprises in a differentiated product environment the case of global malting barley markets this study tested if the exclusive procuring and pricing policies of two state trading enterprises stes in international malting barley markets could be used in a strategic trade context the research provided four key findings first the global malting barley market operated in a quantity setting oligopolistic structure during the study years second both stes and other exporting countries were in cournot competition and thus made available strategic trade possibilities third initial commodity payments were too high to generate a rent shifting outcome fourth product differentiation was confirmed which may have dampened the desire ability of stes to pursue a rent shifting objective

the value of the initial payment of the canadian wheat board as a signaling device this paper analyzes the role of the initial payment used by the canadian wheat board cwb in the determination of export prices and sales under the assumption that the cwb has better information about realized yields in canada than its us competitor in the separating equilibrium of the game the initial payment of the cwb is larger than the initial payment under complete information there exists an incentive under incomplete information to send a signal that realized yields are greater than expected to induce a reduction in the sales of foreign competitors we illustrate the strategic value of the initial payment for canadian wheat producers using a numerical simulation

regionalism in a multilateral world recent regional initiatives have been addressed from a vinerian perspective of trade creation and trade diversion this is true of both policy oriented economists who tend to be critical of the initiatives and theorists who have added dynamic and gametheoretic elements to the vinerian structure this paper describes the stylized facts of much recent regional integration and develops an alternative model the analysis suggests that regional integration far from threatening multilateral liberalism may in fact be a direct consequence of the success of past multilateralism and an added guarantee for its survival

erratum to multilateral trade negotiations bilateral opportunism and the rules of gatt wto abstract trade negotiations occur through time and between the governments of many countries an important issue is thus whether the value of concessions that a government wins in a current negotiation may be eroded in a future bilateral negotiation to which it is not party we identify rules of negotiation that serve to protect the welfare of governments that are not participating in the bilateral negotiation our main finding is that the two central principles of gatt wto nondiscrimination mfn and reciprocity preserve the welfare of nonparticipating governments and therefore offer a first line of defense against bilateral opportunism

trade policy issues and empirical analysis interest in u s trade policy has been stimulated in recent years by the massive american trade deficit by the belief that intervention by foreign governments in international markets has given other countries a competitive edge over the united states and by concern about the increase in protectionism among industrial countries in turn major analytical developments in international economics have revolutionized trade theory broadening its scope both by introducing in a more formal manner such concepts as imperfect competition increasing returns product differentiation and learning effects and by including the study of political and economic factors that shape trade policy decisions this collection of papers the result of a conference held by the nber applies these new trade theories to existing world cases and also presents complementary empirical studies that are grounded in more traditional trade theories the volume is divided into four parts the papers in part 1 consider the problem of imperfect competition empirically assessing the economic effect of various trade policies introduced in industries in which the new trade theory seems to apply those in part 2 isolate the effects of protection from the influences of the many economic changes that accompany actual periods of protection and also examine how the effects from exogenous changes in economic conditions vary with the form of protection part 3 provides new empirical evidence on the effect of foreign production by a country s firms on the home country s exports finally in part 4 two key bilateral issues are analyzed recent u s japanese trade tensions and the incident involving the threat of the imposition of countervailing duties by the united states on canadian softwood lumber

negotiating free trade we develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once we show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining and we identify circumstances in which the grand coalition is the equilibrium outcome leading to worldwide free trade a model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection global free trade is not achieved when the political economy motive for protection is sufficiently large furthermore the model generates both building bloc and stumbling bloc effects of preferential trade agreements in particular we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form a building bloc effect and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden a stumbling bloc effect the analysis identifies conditions under which each of these outcomes emerges

do countries free ride on mfn abstract the most favored nation mfn clause has long been suspected of creating a free rider problem in multilateral trade negotiations to address this issue we model multilateral negotiations as a mechanism design problem with voluntary participation we show that an optimal mechanism induces only the largest exporters to participate in negotiations over any product thus providing a rationalization for the principal supplier rule we also show that through this channel equilibrium tariffs vary according to the herfindahl hirschman index of export shares higher concentration in a sector reduces free riding and thus causes a lower tariff estimation of our model using sector level tariff data for the u s provides strong support for this relationship

protectionism versus risk in screening for invasive species abstract i examine the extent to which enforcement of a biosecurity import restriction us border inspections for foreign pests and diseases is used as a protectionist trade barrier the parameters of a structural model of border inspection are estimated using a detailed dataset documenting the outcome of us agricultural border inspections i find that inspections are conducted in a manner that places an implied welfare weight on domestic producers relative to consumers ranging from 1 to 1 63 i also find evidence that the inspection agency takes terms of trade into account when inspecting agricultural imports these results suggest that border inspections are used as a protectionist non tariff barrier

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item