# **5.3 The impact of institutional features on dispute settlement outcomes**

This section extends the analysis by implementing our preferred model specification on different subsamples of data, where we allow institutional features of the trade agreement and dispute settlement process to establish the relevant subsamples under consideration. Given the relatively small remaining subsamples of disputes, our purpose is admittedly not to strictly test for differences in parameter estimates. Our more modest goal is to investigate whether the exogenously-determined samples help clarify the extent to which our basic modeling approach to trade liberalization negotiations under dispute settlement can potentially explain patterns in the data.

The estimates in columns (4) and (5) of Table 4 assess a split of the dispute sample by characterizing the discriminatory nature of the allegedly WTO-violating policy that is under dispute. Column (4) reports model estimates from the WTO challenges to policies that the respondent applied on a “global” basis, and thus which negatively affect all other WTO member countries in addition to the complainant. Column (5) reports model estimates from the WTO challenges to policies applied on a “partial” basis, in which some other WTO member countries are excluded from the policy and thus may enjoy an implicit preference (relative to the complainant country) in the respondent country’s disputed product import market. Column (4) reveals that the subsample of disputes associated with challenges to policies applied on a “global” basis have estimates that are consistent with theoretical predictions and are statistically significant. In contrast, the model performs less well in column (5), though the coefficient estimates for the theoretically-motivated covariates are so imprecisely estimated that we cannot rule out that they are equivalent to those reported in column (4).

Columns (6) and (7) split the sample in two based on whether the institutional resolution to the WTO dispute was the issuance of a formal legal ruling (of at least a Panel Report) versus no legal ruling whatsoever. Disputes that did not have at least a Panel Report were either settled early or dropped by the complainant. Column (6) reveals that the subsample of disputes that received a legal ruling have estimates that are consistent with theoretical predictions and, for the most part, are statistically significant. Furthermore, for most of the key determinants, the estimates are generally larger and more consistently statistically significant than the estimates from the full sample of disputes, as well as the subsample of disputes without legal decisions. This is both interesting and potentially reassuring for a number of reasons. First, examination of these two different subsamples of data is arguably important, given that some models of the dispute settlement process (e.g., Maggi and Staiger, forthcoming) contain different predictions for policy outcomes in cases that reach a legal ruling versus those that settle early. Second, there is also the possibility that disputes without legal decisions were “weaker” disputes and are ones for which our dispute settlement modeling framework for trade liberalization may not necessarily apply.

The last two columns of Table 4 utilize the current modeling approach to explore whether the complainant country’s capacity to retaliate influences the trade volume outcomes arising from dispute negotiations. These columns allow us to focus on some of the issues first introduced in Bown (2004a), which examined changes in imports arising as dispute outcomes during an earlier period 24