Abstract

The authors examine international trade in a commodity whose production creates a negative externality for the importing country and they consider the nations' strategic policy choices when they can restrict trade and when they are bound by a free-trade agreement. When pollution-abatement...

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...

International trade agreements are an important element of the world economic system, but questions remain as to their purpose. The terms-of-trade hypothesis posits that countries use tariffs in part to improve their terms of trade and that trade agreements cause them to internalize the costs...