Article1997

A Political-Economic Analysis of Free-Trade Agreements

401 citations0/0 files storedAmerican Economic Review

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Global trade and economics World Trade Organization Law Canadian Policy and Governance

Abstract

This paper demonstrates that bilateral free-trade agreements can undermine political support for further multilateral trade liberalization. If a bilateral trade agreement offers disproportionately large gains to key agents in a country, then their reservation utility is raised above the multilateral free-trade level, and a multilateral agreement would be blocked. Bilateral agreements between countries with similar factor endowments are most likely to have this effect. It also follows that bilateral free-trade agreements can never increase political support for multilateral free trade. Copyright 1997 by American Economic Association.

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References

1950The Bargaining Problem 1988Diplomacy and domestic politics: the logic of two-level games 1982Perfect Equilibrium in a Bargaining Model 1986Market Structure and Foreign Trade 1941Protection and Real Wages 1985Market structure and foreign trade 1989Public choice II 2002On Theories Explaining the Success of the Gravity Equation

Cited by

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