Multilateral Trade Bargaining and Dominant Strategies

40 Pages Posted: 14 Nov 2018

See all articles by Kyle Bagwell

Kyle Bagwell

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Robert W. Staiger

Stanford University; University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2018

Abstract

Motivated by General Agreement on Tariffs and Trade bargaining behavior and renegotiation rules, we construct a three‐country, two‐good general‐equilibrium model of trade and examine multilateral tariff bargaining under the constraints of nondiscrimination and multilateral reciprocity. For a general representation of government preferences, we identify the bargaining outcomes that can be achieved using dominant strategy proposals for all countries. In our analysis, dominant strategy outcomes emerge when tariff proposals are followed by multilateral rebalancing. The resulting bargaining outcome is efficient relative to government preferences if and only if the initial tariff vector positions the initial world price at its “politically optimal” level.

Suggested Citation

Bagwell, Kyle and Staiger, Robert W., Multilateral Trade Bargaining and Dominant Strategies (November 2018). International Economic Review, Vol. 59, Issue 4, pp. 1785-1824, 2018, Available at SSRN: https://ssrn.com/abstract=3283997 or http://dx.doi.org/10.1111/iere.12320

Kyle Bagwell (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robert W. Staiger

Stanford University ( email )

Stanford, CA 94305
United States

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-262-2265 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
165
PlumX Metrics