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Quantitative Analysis of Multi-Party Tariff Negotiations

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  • Kyle Bagwell
  • Robert W. Staiger
  • Ali Yurukoglu

Abstract

This paper develops a model of international tariff negotiations to study the design of the institutional rules of the GATT/WTO. We embed a multi-sector model of trade between multiple countries into a model of inter-connected bilateral negotiations over tariffs. Using 1990 trade flows and tariff outcomes from the Uruguay Round of GATT/WTO negotiations, we estimate country-sector productivity levels, sector-level productivity dispersion, iceberg trade costs, and country-pair bargaining parameters. We use the estimated model to simulate an alternative institutional setting for multilateral tariff negotiations in which the most-favored-nation requirement is abandoned. We find that abandonment of the most-favored-nation requirement would result in inefficient over-liberalization of tariffs and a deterioration in world-wide welfare relative to the negotiated outcomes in the presence of the most-favored-nation requirement.

Suggested Citation

  • Kyle Bagwell & Robert W. Staiger & Ali Yurukoglu, 2018. "Quantitative Analysis of Multi-Party Tariff Negotiations," NBER Working Papers 24273, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:24273
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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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