Trade Agreements as Endogenously Incomplete Contracts

We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements.

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Year of publication:	2006-12
Authors:	Maggi, Giovanni ; Staiger, Robert W. ; Horn, Henrik
Institutions:	National Bureau of Economic Research (NBER)

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Extent:	application/pdf
Series:	NBER Working Papers.
Type of publication:	Book / Working Paper
Notes:	ITI published as Henrik Horn & Giovanni Maggi & Robert W. Staiger, 2010. "Trade Agreements as Endogenously Incomplete Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 394-419, March. Number 12745
Classification:	D02 - Institutions: Design, Formation, and Operations ; F1 - Trade ; F13 - Commercial Policy; Protection; Promotion; Trade Negotiations ; F15 - Economic Integration ; F51 - International Conflicts; Negotiations; Sanctions ; F53 - International Agreements and Observance; International Organizations ; F59 - International Relations and International Political Economy: Other
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005778415