is free trade in the interest of exporting countries when there is ecological dumping abstract given conditions of oligopolistic competition the coordinated ban of direct export promoting policies e g in the eu or by gatt increases the income of exporting countries however in the presence of environmental distortions free trade can lead to ecological dumping in exporting countries the question arises if free trade is still in the interest of exporting countries we show that welfare maximizing governments of exporting countries prefer free trade even if countries subsidize their local industries indirectly via ecological dumping the existence of further national policy instruments does not make free trade agreements obsolete

reforms of environmental policies in the presence of cross border pollution and public private clean up we construct a two country model where pollution from production is transmitted across borders pollution abatement is undertaken by both private producers and the public sector we characterize nash optimal levels of the policy instruments in the two countries emission taxes and funds allocated for public abatement activities we examine the implications of a number of multilateral policy reforms one of our findings is that the magnitude of the beneficial effect of a reform depends on the scope of the reform if it is restricted to a subset of policy instruments then the efficacy of environmental policy reform can be greatly undermined

towards an attention based view of the firm the central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision makers what decision makers do depends on what issues and answers they focus their attention on what issues and answers they focus on depends on the specific situation and on how the firm s rules resources and relationships distribute various issues answers and decision makers into specific communications and procedures the paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation 1997 by john wiley sons ltd

trade disputes and the implementation of protection under the gatt an empirical assessment abstract this paper is a first attempt to empirically determine why countries choose to violate or adhere to gatt rules when making trade policy adjustments between negotiating rounds we use a previously unexploited set of data in which countries implemented two types of protection under the gatt system between 1973 and 1994 i legal protection in which countries utilized the gatt s safeguards provisions and ii illegal protection in which the protection was provided outside of the safeguards provisions resulting in a formal trade dispute we find substantial evidence that concerns for retaliation affect government policy decisions in ways which contribute to the explanation of the existence of trade disputes

customs unions and domestic taxes it is well known that nondiscriminatory domestic taxes and subsidies are perfect substitutes for nondiscriminatory trade policies and would render useless international agreements restricting trade policy alone the author shows that these instruments generally are imperfect substitutes for trade policy in a customs union however in one popular specification of trading patterns access to such tax powers nevertheless renders a customs union useless furthermore numerical simulations demonstrate that a union may be ineffective in many other cases severely curtailing the potential unions that are attractive to both members the author illustrates the restrictive conditions under which a union will then form

permit trading merely an efficiency neutral redistribution away from climate change victims in this paper we present a climate policy game with international emissions trading where governments first select their amounts of emissions permits these permits are transferred to firms and then traded competitively on an international market compared with a game without trading we find that the potential efficiency gains from permit trading which have been identified in other studies are totally undone if governments also employ a tax or subsidy on domestic emissions the only effect of permit trading in this case is a redistribution of income away from those most affected by climate change

product quality consumption externalities and the role of national treatment abstract article iii of the wto national treatment limits domestic policy in an effort to curtail protectionist discrimination against foreign products in this paper we examine the role of national treatment and prominent article xx exceptions when goods are vertically differentiated and generate consumption externalities we study the domestic policy choices of two countries first stage problem and quantity and price equilibria in two product markets second stage problem under a strict application of article iii and compare them to the policy choices and product market equilibria prevailing when countries can misrepresent external damages and discriminate while one may expect that high externalities would lead to a greater need for exceptions to equal treatment we show that this is often not the case and furthermore that non discrimination can lead to a cleaner world environment

disguised protectionism global trade rules and alien invasive species current international law strongly favors policies designed to make imports safer e g in terms of invasive species over policies explicitly designed to discourage imports we show that this preference may be counterproductive a externality in trade is incorporated into a political economy model of policy formation nations can address the externality by inspecting cargo and imposing a fine on contaminated imports we compare the equilibrium when inspection is the only policy option relative to the equilibrium that emerging when nations may also manipulate the tariff ruling out the tariff causes socially excessive stringency in general social welfare losses if domestic supply is highly inelastic and in some circumstances an increase in the real tariff measured as the difference between world and domestic prices

trade liberalization and environmental taxation in federal systems the literature on trade liberalization and environment has not yet considered federal structures in this paper we show how the design of environmental policy in a federal system has implications for the effects of trade reform trade liberalization leads to a decline in pollution taxes regardless of whether pollution taxes are set at the federal centralized or local decentralized level and it increases social welfare the effect under a decentralized system is smaller than if these taxes are set by the federal government and pollution emissions therefore decline in this case moreover majority bias interacts with trade liberalization if federal taxes are used

international trade and environmental quality a survey abstract international trade has been incorporating various aspects of environmental issues since 1970 the extent to which environmental problems might affect many facets of trade or vice versa has been the subject of considerable debate over these years in this article we have attempted to establish some of the links between international trade and environmental quality by performing a comprehensive literature review we discuss issues such as establishing direct and indirect effects of international trade on environmental quality effects of trade on economic development environmental quality and energy and their relation with each other and finally the role of governments and international organizations in this context studies have so far revealed some linkages between trade and environment through conventional trade theory however interactions between international trade and types of pollution their sink and assimilative capacity need to be analyzed using a general equilibrium approach currently very little knowledge and agreement on the nature of interactions between trade theories development process and environmental quality exist existing studies have shown that the structure of environmental regulations should be modified to reflect the existence of trade under imperfect competition therefore further research on the interaction between new trade theory and environmental regulation is needed also theoretical and quantitative analysis regarding the effects of environmental regulations on competitiveness and location decision is needed the intensity and type of environmental measures vary across issues and countries therefore harmonizing environmental measures creates an inefficient atmosphere and to assume that trade restrictions will either improve or reverse the environmental damages is a serious mistake given the dynamic and intricate nature of the problem trade and environment debate continues despite vast research and poses a challenge for researchers and policy makers in the foreseeable future

policy choice theory and evidence from commitment via international trade agreements abstract why do governments employ inefficient policies when more efficient ones are available for the same purpose we address this puzzle in the context of redistribution toward special interest groups sigs by focusing on a set of important policies tariffs and non tariff barriers ntbs in our policy choice model a government can gain by committing to constrain tariffs through international agreements even if this leads to the use of less efficient ntbs commitment has political value because it improves the bargaining position of a government that is weak relative to domestic sigs using detailed data we find support for several of the model s predictions including i tariff commitments in trade agreements increase the likelihood and restrictiveness of ntbs but not enough to offset the original tariff reductions ii tariff commitments are more likely to be adopted and more stringent when the government is weaker relative to a sig thus the results can explain the use of inefficient policies for redistribution and suggest that the bargaining motive is an important source of the political value of commitment in international agreements

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

trade policy cross border externalities and lobbies do linked agreements enforce more cooperative outcomes abstract we analyze whether linking international cooperation in trade policy to environmental policy or other issues with nonpecuniary externalities promotes more cooperation in both policies or whether cooperation in one is strengthened at the expense of the other in the context of self enforcing agreements we show that if the policies are independent in the government s objective function then linkage promotes cooperation in one policy at the expense of the policy that is easier to enforce under no linkage however if the linked policies are not independent and if these policies are strategic complements then linkage can sustain more cooperation in both issues than no linkage the policies are strategic complements only if i the production externality has cross border effects ii the weight on the externality cost is high iii import competing lobbies are not powerful

redistribution state trading enterprises and politically optimal tariffs state trading enterprises stes are widely used and can be viewed as instruments of trade policy we analyse two aspects the first is their potential trade distorting effect the second is how they modify the case for the politically optimal tariff we show that the ste can reduce the need for a tariff designed for domestic redistribution this result introduces some ambiguity about how stes are interpreted from a multilateralist perspective they should be dealt with in the same way as other non tariff barriers from a nationalistic perspective they can reduce the need for politically optimal redistribution entreprises d etat impliquees dans le commerce international et tarifs politiquement optimaux les entreprises d etat impliquees dans le commerce international eeici sont communement utilisees comme instruments de politique commerciale on analyse deux aspects de cette intervention le premier est leur effet potentiel de distorsion sur les flux commerciaux le second est jusqu a quel point cette intervention modifie l argument du tarif politiquement optimal on montre que les eeici peuvent reduire le besoin d un tarif defini pour des fins de redistribution au niveau domestique le resultat injecte une certaine ambiguite dans le traitement des eeici d un point de vue international on devrait les traiter comme toute autre barriere non tarifaire d un point de vue nationaliste ils peuvent reduire le besoin de faire appel au politiquement optimal

false friends empirical evidence on trade policy substitution in regional trade agreements in this paper we examine the interplay of regional economic integration and the use of bilateral antidumping ad measures our empirical analysis brings three central findings to light i we find that regional trade agreements rtas generally reduce the likelihood of ad activity among integration partners ii in addition an improvement in the tariff treatment between trading partners regardless of whether expressed as the directly faced tariff or as a tariff margin generally leads to a lower likelihood of bilateral ad and iii regarding the interaction of both events however a reciprocally higher tariff margin between integration partners leads to a higher likelihood of bilateral ad than an equal tariff margin among non integration trading partners the latter effect seems to be primarily driven by those rtas with a participation of south countries

an empirical investigation of the pollution haven effect with strategic environment and trade policy abstract using a new dataset on the stringency and enforcement of environmental policy this study is the first to find robust confirmation of a pollution haven effect in a cross country context by accounting for strategically determined environment trade and intellectual property right ipr policies a simple game theoretic approach to policy determination is described which suggests an identification strategy based on other country characteristics it is found that for the top 20th percentile of countries in terms of growth in u s multinational affiliate value added as much as 8 6 of that growth between 1999 and 2003 can be attributed to declining relative stringency and enforcement of environmental policy the results are robust to a number of identification tests weak iv tests and third country spatial effects further evidence is found that relatively footloose industries are more likely to be affected by environmental policy than more traditionally dirty industries and enforcement of environmental policies tends to be a more important deterrent than the stringency of the policy set

after the break up the relational and reputational consequences of withdrawals from venture capital syndicates organizational theorists are increasingly interested in the antecedents of terminating interorganizational relationships but have paid little attention to the disruptive consequences of such termi

the trap of continual ownership change in international equity joint ventures this article examines how multiple ownership changes unfold in international equity joint venture iejv evolution and how such repeated changes impact short term performance and long term survival by theorizing a new concept the trap of continual change in the iejv context we challenge the adaptive viewpoint assumed in alliance dynamics research we propose that partners sometimes respond to an initial dissatisfaction with the venture result with a dysfunctional repetition of rearranging the ownership control structure this continual change locks the organization into bad choices and sends it into a downward spiral acknowledging the mixed motive nature of inter partner relationships we incorporate cooperative versus competitive dynamics manifested in shared control arrangements we propose that shared ownership control lends stability to the iejv until the initial iejv agreement is renegotiated this stability is a result of the cooperative forces of mutual interdependence and mutual forbearance between the partners however when the power balance breaks down the potential for inter partner conflict increases when the ownership control structure of the iejv is restructured especially multiple times shared control arrangements become increasingly unstable as behavioral cultural and managerial differences are amplified

policy linkage and uncertainty in international agreements i introduction negotiations over the north american free trade agreement nafta brought issues concerning the environment and a country s environmental policies to the forefront of international trade negotiations as a result nafta includes several environmental provisions as well as an environmental side agreement the side agreement established a commission to review each country s environmental standards and environmental enforcement record in addition the side agreement includes an enforcement mechanism to ensure that each country upholds its standards by threatening the withdrawal of trade benefits for noncompliance thus nalfta ties the benefits of the trade policy portion of the agreement to compliance in a side agreement concerning domestic policies in this sense nafta appears to reflect a belief in the benefits of linking issues e g trade and domestic policy obligations within an integrated agreement the question of when issues should be linked will only grow in importance in coming years as issues of trade and the environment or other domestic policy issues like labor standards move to the forefront indeed at the ministerial meetings in 1994 at the close of the uruguay round many general agreement on tariffs and trade gatt delegates renewed demands for the relationship between trade and various domestic policies including environmental policy labor standards and competition policy to be examined the question of how to integrate environmental issues into the world trade organization wto will no doubt be accompanied by questions of whether to enforce environmental obligations with the threat of the suspension of trade concessions many free trade advocates have argued that environmental issues and other domestic concerns should be negotiated in separate international agreements that are divorced from the gatt wto framework in effect calling for two separate nonlinked agreements thei r primary concern is that disputes with respect to environmental policy will undermine the previous gains made in liberalizing trade barriers in contrast many environmentalists argue that environmental concerns should be more fully integrated into existing international agreements a linked agreement their main concern is that any environmental agreement that is separate from the gatt wto framework will be unenforceable without the threat of trade policy retaliation this article addresses these concerns with a theoretical analysis of the benefits and costs of linking issues like trade and domestic policy within a unified agreement under conditions of uncertainty the theory of self enforcing trade agreements has been well established by dixit 1987 bagwell and staiger 1990 and riezman 1991 who showed how countries can support low tariffs within a repeated relationship by configuring the tariff agreement so that each country fears that a decision to cheat on the agreement would trigger a costly retaliatory episode in the future ederington 2002 extended this repeated tariff game to include two policy instruments trade and domestic policy and showed that under conditions of perfect information cross retaliation e g enforcing cooperative domestic policies with the threat of trade policy retaliation does not help support a more efficient agreement intuitively even though trade policy sanctions are a stronger punishment to cheating they are not necessary because countries have less incentive to deviate from the agreement with their domestic policy thus with perfect information linked and nonlinked agreements are functionally equivalent however this leaves unanswered the question of whether or not cross retaliation may be beneficial or detrimental under conditions of imperfect monitoring it seems natural to relax the assumption of perfect information especially with respect to domestic policies and other nontariff trade barriers

wto tariff commitments and temporary protection complements or substitutes abstract there is a long held notion in the trade policy literature that traditional tariff instruments and temporary protection tp measures are substitutes despite this prediction there is only mixed empirical evidence for a link between tariff reductions and the usage pattern of antidumping safeguard and countervailing duties based on recent theoretical advances i argue in this paper that the relevant trade policy margin for implementing tp measures is instead tariff overhangs the difference between wto bound and applied tariffs lower tariff overhangs constrain countries to raise their mfn applied rates without legal repercussions independent of past tariff changes using detailed sectoral data for a sample of 30 wto member countries during the period 1996 2014 i find strong evidence for an inverse link between tariff overhangs and tp activity this result implies that tariff overhangs and tp measures are substitutes vindicating the importance of existing tariff commitments as a key determinant of alternative protection instruments

networks as the pipes and prisms of the market1 this article draws an analytical distinction between two types of market uncertainty egocentric which refers to a focal actor s uncertainty regarding the best way to convert a set of inputs to an output desired by a potential exchange partner and altercentric which denotes the uncertainty confronted by a focal actor s exchange partners regarding the quality of the output that the focal actor brings to the market given this distinction the article considers how the value of structural holes and market status vary with these two types of uncertainty the article proposes that the value of structural holes increases with egocentric uncertainty but not with altercentric uncertainty in contrast the value of status increases with altercentric uncertainty but declines with egocentric uncertainty thus actors with networks rich in structural holes should sort into markets or market segments that are high in egocentric uncertainty high status actors should sort into markets that are low in egocentric

gatt a cooperative equilibrium in a noncooperative trading regime abstract as global tariff rates have fallen the use of nontariff barriers to trade have become more prevalent one incentive for a country to depart from free trade is to levy the optimal tariff in order to maximize domestic welfare the gatt was designed to maintain free trade through a system of managed retaliation as is well known in a game theoretic trade model of tariffs with no uncertainty free trade is an equilibrium outcome however with the introduction of uncertainty and asymmetric information it is shown that the equilibrium outcome s has each country imposing nontariff barriers to trade

national treatment in the gatt the national treatment nt clause is the first line defense in the gatt and in most other trade agreements against opportunistic exploitation of the inevitable incompleteness of the agreement this paper examines the role of nt as it applies to internal taxation under the gatt it is shown that despite severely restricting the freedom to set internal taxes nt may improve government welfare but it will not completely solve the incomplete contract problem it is meant to remedy furthermore it requires a high degree of economic sophistication on behalf of trade negotiators in order for this beneficial effect to materialize

trade agreements with domestic policies as disguised protection abstract wto rules prohibit disguised protection in the form of domestic policies how then do governments cooperate over trade and domestic policies when none can verify whether a nation s domestic tax reduction is a protective measure or a reaction to a production externality in this paper each government privately observes whether a production externality associated with its import competing good is high or low this paper finds that in an optimal agreement disguised protection with domestic policies is never used by governments with a high externality and is never commonly realized moreover in an optimal agreement tariffs may be conditional on domestic policies

regional versus multilateral trade liberalization environmental taxation and welfare the paper considers trade between identical countries with imperfectly competitive markets and compares the impacts of regional and multilateral tariff reduction on strategic environmental taxation and welfare while both forms of trade liberalization increase production and consumption in tariff reducing countries regionalism also reduces production in a non participating country and may decrease its consumption consequently regionalism and multilateralism change pollution tax and welfare in the tariff reducing countries in similar ways when pollution is local but in dissimilar ways for global pollution when pollution is global regionalism is likely to be preferred to multilateralism for the establishment of free trade among countries liberalisation du commerce regional versus celle du commerce multilateral fiscalite environnementale et bien etre ce memoire considere le commerce entre des pays identiques avec des marches de concurrence imparfaite et compare les impacts d une reduction regionale et multilaterale de tarifs sur la fiscalite environnementale strategique et le bien etre meme si les deux formes de liberalisation accroissent la production et la consommation dans les pays qui reduisent les tarifs le regionalisme reduit aussi la production dans un pays non participant et peut reduire sa consommation consequemment regionalisme et multilateralisme changent la taxe sur la pollution et le bien etre dans les pays qui reduisent leur tarif d une maniere similaire quand la pollution est locale mais de maniere dissimilaire quand la pollution est globale quand la pollution est globale le regionalisme est susceptible d etre prefere au multilateralisme pour l etablissement du libre commerce entre pays

nontariff barriers and trade liberalization i introduction it is common to recognize that tariffs have gradually been replaced by nontariff barriers ntbs some authors go even further and argue there is a law of constant protection an expression used by bhagwati 1988 mainly to dismiss the idea baldwin 1984 600 for instance writes not only have these measures become more visible as tariffs have declined significantly through successive multilateral trade negotiations but they have been used more extensively by governments to attain the protectionist goals formerly achieved with tariffs the purpose of this article is to set up a model in which the effect of trade liberalization on the use of quotas and antidumping laws can be investigated directly we analyze two types of bilateral trade liberalization tariff reductions and quota elimination we show that our model is consistent with a progression from the use of tariffs only to the use of quotas following tariff liberalization to the use of antidumping laws when quotas have been jointly tarrified second it is also consistent with a narrowing of the range of industries in which each of these instruments is used third the extent of bilateral tariff liberalization and the ensuing degree of replacement of tariffs by ntbs depend on the combination of two industry specific characteristics the government s preferences for domestic firm profits and the importance of international transport cost in the industry overall our results suggest that treaties that remove or reduce one type of distortion may lead to the use of other policies tha t are even worse but despite the use of ntbs overall trade is more liberal to show these results we use a standard two country model with two way trade where the policy maker s objective function is quasi concave this last characteristic is important to explain some of the results as it leads to strategic complementarity in the tariff game and to the possibility of interior solutions in the quota game our results appear to track three separate sets of empirical facts well first evidence shows that there is a clear emergence of quantitative restrictions in the 1960s in manufacturing sectors and in developed economies followed by an explosion in the use of antidumping constraints since the 1980s 1 the emergence of these two ntbs can be linked to preceding multilateral trade rounds and in particular to the completion of the kennedy round today the general agreement on tariffs and trade gatt 1990 10 notes that despite a recent decline in the number of anti dumping investigations initiated in the united states and the european communities anti dumping remains after tariffs the most frequently invoked trade policies in these countries antidumping measures are also spreading to developing countries nogues 1993 quantitative restrictions are meanwhile on the decline as signatories of the uruguay round agreement are now required to tariffy existing quotas and constrain their future use gatt 1990 documents specific import quotas import licensing restrictions and items subject to import prohibition that have been eliminated in recent years second the gradual replacement of trade tools has also been accompanied by a reduction of the number of sectors affected by ntbs whereas very few products were traded without levy before the various gait rounds renner 1971 finds that 7 of the four digit product classes were affected by quantitative restrictions in the united states and in the european communities in 1970 the number of antidumping cases in the european communities initiated and or ending up with a positive decision represents a fraction of this number see gait 1993b mainly concentrated on a very small number of sectors see messerlin and reed 1995 of course it is not because a smaller number of sectors are affected by ntbs that overall protection necessarily decreases however given the high rates of growth in world trade it seems likely that despite this substitution the overall level of protection has decreased over time

domestic policies national sovereignty and international economic institutions to what extent must nations cede control over their economic and social policies if global efe ciency is to be achieved in an interdependent world this question is at the center of the debate over the future role of the wto formerly gatt in the realm of labor and environmental standards in this paper we establish that the market access focus of current wto rules is well equipped to handle the problems associated with choices over labor and environmental standards in principle with relatively modest changes that grant governments more sovereignty not less these rules can deliver globally efe cient outcomes i introduction to what extent must nations cede control over their economic and social policies if global efe ciency is to be achieved in an interdependent world at a broad level this question probes the limits of any international economic institution whether geared toward real or e nancial concerns that is designed to promote global efe ciency while respecting national sovereignty naturally the answer depends upon the particular problem that the institution is meant to solve in other words the answer depends upon the inefe ciency that would arise under unilateral policy choices at a more specie c level this question is at the center of the debate concerning the appropriate scope of the world trade organization wto formerly gatt recently member countries have considered ways to broaden the wto s orientation beyond conventional trade policy measures to include labor and environmental standards there are now initiatives to introduce the issue of labor standards directly onto the negotiating agenda of the wto with the purpose of creating a wto social clause the social clause would specify a set of minimum international labor standards and then permit restrictions to be placed against imports from countries not complying with these minimum standards with regard to environmental policies a wto committee on trade and environment has been established to identify the relationships between trade and environmental measures and to

strategic interaction among nations negotiable and non negotiable trade barriers trade policy is modelled as a two stage game between governments governments choose a negotiable trade barrier in the first stage of the game which is co operative the level of this barrier is treated as a binding commitment in the second stage of the game where the non negotiable trade barrier is chosen non co operatively hence governments choose trade barriers during negotiations with a view to influencing the equilibrium of the non co operative game to follow this proves to be a convenient framework in which to analyse the idea that trade agreements contain loopholes which can be exploited by protectionist governments trade negotiations induce substitution toward less efficient instruments of protection but are nevertheless welfare improving as long as the negotiations are relevant i e the negotiable barrier is actually in use and the two instruments are not perfect substitutes

a conjectural variation approach to strategic tariff equilibria abstract this paper examines tariff equilibria in a static two country trade model under a general class of conjectures regarding foreign retaliation we assume that each country chooses its optimum tariff given some conjecture in this class and derive the associated conjectural tariff equilibrium which can be thought of as a nash equilibrium conditional on each country s conjecture about how the foreign country will retaliate our main contribution is to show that when marginal propensities to consume imports are sufficiently small increased expectation of retaliation results in lower equilibrium tariffs for both countries since countries in general probably do expect some retaliation it therefore appears that the traditional cournot nash analysis probably overstates the trade restrictiveness of tariff wars

environmental duties and international harmonization of standards demands by domestic industries for protection from foreign competition aided by lower standards have led to proposals to set trade barriers conditional on the environmental policies of other countries this article shows that the threat of such environmental duties can assist in achieving global efficiency when countries cannot commit to a negotiated environmental standard in addition this article shows that in a repeated game framework the enforcement of a free trade agreement may require some convergence in environmental standards across countries when trade is driven by differences in such standards however it is also shown that it is more efficient to enforce a trade agreement by setting tariffs to partially offset differences in policy standards than to attempt to harmonize standards within environmental side agreements

tariffs and quotas retaliation and negotiation with two instruments of protection abstract this paper examines the equilibrium level of trade barriers in a two country world when both tariffs and quotas are available as instruments of protection it is shown that the set of efficient equilibria is the same when either tariffs or quotas but not both may be negotiated furthermore it is shown that a trade eliminating quota war will not occur unless bargaining over tariffs is inefficient

trade disputes and settlement we develop a model of trade agreements with renegotiation and imperfectly verifiable information in equilibrium trade disputes can occur and can be resolved in a variety of ways governments may settle early or trigger a court ruling and in the latter case they may implement the ruling or reach a post ruling settlement the model yields predictions on how the dispute outcome depends on the contracting environment and how it correlates with the optimal contract form we find support for a key prediction of our model using data on the outcomes of actual trade disputes in the general agreement on tariffs and trade world trade organization

the political economy linkage between trade liberalization and domestic environmental regulations this paper considers the political economy linkage between trade liberalization and domestic environmental regulations in a duopolistic product market we investigate the environmental consequences and welfare implications of a home country s unilateral tariff reduction on a polluting good in a framework where the domestic environmental tax is subject to the influence of the home firm we find that a tariff reduction on a good producing a consumption type externality will improve the home country s environmental quality moreover we find that the home country s tariff reduction will unambiguously enhance the home country s welfare and it will damage the foreign firm s profits and thus the foreign country s welfare provided that the weight that the home government attaches to its social welfare is sufficiently small this result also suggests the possibility that a unilateral tariff reduction will achieve a pareto improvement

the liability of good reputation a study of product recalls in the u s automobile industry in this paper we explore opposing theoretical claims about how organizational reputation affects market reactions to product defects on the one hand good reputation could be a disadvantage because expectations about product quality are more likely to be violated by defects in highly reputed products on the other hand a good reputation could be an advantage because of strong inertial effects on reputation orderings we empirically test these competing hypotheses using data on product recalls in the u s automobile industry from 1975 to 1999 our results support for the idea that reputation can be an organizational liability in that highly reputed firms suffer more market penalty as a result of their product recalls we also propose that the reputational effects are moderated by two important factors substitutability and generalism specialism our results show that having few substitutes with an equivalent level of reputation or a focused product identity stemming from specialism buffers the negative market reactions to product recalls we conclude with a discussion on the implications of these results for institutional reputation and status theories

a model of substitution of non tariff barriers for tariffs in this paper some coherent explanations are suggested for tariff reductions and substitution of non tariff barriers for tariffs taking into account both organized special interests and unorganized consumer interests the focus is on how the presence of informed consumers affects the political equilibrium choice of trade policy three effects are identified that interact with each other as an incumbent government substitutes a ntb for a tariff and among other things it is found that an increase in foreign competition will not cause the government to substitute ntbs for tariffs but a rise in the government s valuation of political contribution might do so jel classification f13 d72 ce memoire propose des explications coherentes de la reduction des droits de douane et de la substitution de barrieres non tarifaires bnt pour les droits de douane dans un cadre d analyse qui tient compte des groupes d interet organises et de la desorganisation des groupes de consommateurs l analyse insiste sur l impact de consommateurs informes sur les choix politiques qui sous tendent la politique commerciale le memoire identifie trois effets effet de bienetre social effet de lobbying effet d information qui jouent au moment ou un gouvernement substitue une barriere non tarifaire a un droit de douane on montre entre autres choses qu un accroissement de la concurrence etrangere n engendre pas de substitution de bnt pour un droit de douane mais qu un accroissement de la valeur accordee aux contributions electorales peut fort bien avoir cet effet