Publication Type

Journal Article

Version

acceptedVersion

Publication Date

3-2020

Abstract

How does the presence of multilateral institutions affect the sustainability of trade-policy cooperation? Do free-trade agreements make multilateral cooperation less sustainable? Will countries be more likely to deviate from negotiated tariffs when more trade liberalization realizes in the future? These questions have been studied in theory literature using models that feature repeated games, but have yet to be quantitatively analyzed. In this paper, I propose a methodology to quantitatively characterize the equilibrium strategies on tariffs of various nations in a widely used repeated-game framework. I then apply this methodology to address these questions from a quantitative perspective. The numerical results computed from a reasonably comprehensive general equilibrium trade model corroborate previous analysis derived theoretically from simpler trade models. However, only free-trade agreements appear to influence the sustainability of trade-policy cooperation with quantitative significance.

Keywords

Propensity to deviate, Quantitative trade policy, Repeated game

Discipline

International Economics

Research Areas

International Economics

Publication

Journal of International Economics

Volume

123

First Page

1

Last Page

17

ISSN

0022-1996

Identifier

10.1016/j.jinteco.2020.103305

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jinteco.2020.103305

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