Working Paper No. 916

Why the WTO? An Introduction to the Economics of Trade Agreements

Published: May 23, 2012Pages: 68Keywords: Trade agreements, GATT; WTOJEL-codes: F13
Published version

Why the WTO? An Introduction to the Economics of Trade Agreements Gene M. Grossman and Henrik Horn


The purpose of this study is to present to readers with limited training in economics the perspective that most international trade economists bring to the study of trade agreements. It focuses on the main approach in the literature, which sees these agreements as means to address negative international externalities that would arise from unilateral determination of trade policies. The study argues that this approach may help explain salient features of trade agreements in general, and of the GATT in particular, such as their reciprocal nature, the need for trade agreements to be self-enforcing, and the inevitable contractual incompleteness of trade agreements. The study also discusses the main critiques that have been directed against this popular approach.

 

Henrik Horn

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Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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