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“GATT‐think” with Asymmetric Countries

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  • Paolo Epifani
  • Juliette Vitaloni

Abstract

We argue that a trade agreement which conforms to GATT’s reciprocity rule benefits the (stronger) less trade‐dependent country at the expense of the (weaker) more trade‐dependent country. Reciprocity is so unfavorable to the weaker country that it may be worse off under reciprocity than under the Nash‐ bargaining solution, a “power‐based” approach to trade negotiations that reflects power asymmetries among trading partners. Our results question Bagwell and Staiger’s (1999, 2000) view of reciprocity as a rule that “serves to mitigate the influence of power asymmetries on negotiated outcomes.”

Suggested Citation

  • Paolo Epifani & Juliette Vitaloni, 2006. "“GATT‐think” with Asymmetric Countries," Review of International Economics, Wiley Blackwell, vol. 14(3), pages 427-444, August.
    • Handle: RePEc:bla:reviec:v:14:y:2006:i:3:p:427-444
    DOI: 10.1111/j.1467-9396.2006.00654.x
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    References listed on IDEAS

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    1. Park, Jee-Hyeong, 2000. "International trade agreements between countries of asymmetric size," Journal of International Economics, Elsevier, vol. 50(2), pages 473-495, April.
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    12. Michalopoulos,Constantine, 1999. "Trade policy and market access issues for developing countries : implications for the Millennium Round," Policy Research Working Paper Series 2214, The World Bank.
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    Cited by:

    1. Florian Freund, 2017. "Reciprocal Tariff Reductions Under Asymmetric Bargaining Power," The World Economy, Wiley Blackwell, vol. 40(5), pages 978-992, May.
    2. Euan MacMillan, 2014. "Explaining rising regionalism and failing multilateralism: consensus decision-making and expanding WTO membership," International Economics and Economic Policy, Springer, vol. 11(4), pages 599-617, December.
    3. Pascalis Raimondos & Alan D. Woodland, 2011. "Reciprocity, World Prices and Welfare," CESifo Working Paper Series 3607, CESifo.
    4. Jean-Marc Malambwe Kilolo, 2018. "An elementary model of export tax war," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 307-325, May.

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    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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