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Gradualism in the GATT: Strategic tariff bargaining and forward manipulation

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  • Jackie M. L. Chan

Abstract

This paper examines strategic bargaining in a non‐cooperative game of tariff negotiation in the General Agreement on Tariffs and Trade (GATT). In the model, a country bargains sequentially and bilaterally with multiple trading partners under the MFN principle, making take‐it‐or‐leave‐it offers consisting of tariffs and transfers. A dynamic bargaining inefficiency arises in which the country strategically delays the reduction of its tariff until the final stage, and extensions to the model demonstrate gradual trade liberalization over multiple stages. Based on this idea of forward manipulation, the theory provides an explanation for gradualism in tariff reduction during the early GATT rounds.

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  • Jackie M. L. Chan, 2019. "Gradualism in the GATT: Strategic tariff bargaining and forward manipulation," Review of International Economics, Wiley Blackwell, vol. 27(1), pages 220-239, February.
    • Handle: RePEc:bla:reviec:v:27:y:2019:i:1:p:220-239
    DOI: 10.1111/roie.12373
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    Cited by:

    1. Bagwell, Kyle & Staiger, Robert W. & Yurukoglu, Ali, 2020. "“Nash-in-Nash” tariff bargaining," Journal of International Economics, Elsevier, vol. 122(C).

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