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Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain

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  • Ignatius J. Horstmann
  • James R. Markusen
  • Jack Robles

Abstract

There has been much discussion about what issues should be included in international 'trade' negotiations. Different countries, firms and activists groups have quite different views regarding which items should (or should not) be negotiated together. Proposals run the gamut from no linking to linking trade with investment, the environment, labor and human-rights codes. This paper provides a formal framework for analyzing these questions. It employs a two-country, two-issue bargaining model and contrasts outcomes when issues are negotiated separately and when they are linked in some form. A key concept is 'comparative interest', analogous to Ricardian comparative advantage. We provide general results and note, in particular, where a country can benefit by agreeing to include an agenda item for which, when viewed by itself, the country does not receive a positive payoff.

Suggested Citation

  • Ignatius J. Horstmann & James R. Markusen & Jack Robles, 2001. "Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain," NBER Working Papers 8347, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8347
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    Cited by:

    1. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2009. "Pros and Cons of Linking Trade and Labor Standards," World Scientific Book Chapters, in: Globalization And International Trade Policies, chapter 16, pages 599-621, World Scientific Publishing Co. Pte. Ltd..
    2. Nuno Limão, 2018. "Trade policy, cross-border externalities and lobbies: do linked agreements enforce more cooperative outcomes?," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 9, pages 257-281, World Scientific Publishing Co. Pte. Ltd..
    3. Markusen, James R., 2012. "Per-Capita Income as a Determinant of International Trade and Environmental Policies," Discussion Papers 2013-06, Graduate School of Economics, Hitotsubashi University.
    4. James R. Markusen, 2014. "Per-Capital Income as a Determinant of International Trade and Environment Policies," CESifo Working Paper Series 4618, CESifo.
    5. Pierpaolo Battigalli & Giovanni Maggi, 2003. "International agreements on product standards: an incomplete-contracting theory," Working Papers 229, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. Hirbod Assa & Sheridon Elliston & Ehud Lehrer, 2016. "Joint games and compatibility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(1), pages 91-113, January.
    7. Rauscher, Michael, 2001. "International trade, foreign investment, and the environment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.

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    More about this item

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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