Trade Agreements As Endogenously Incomplete Contracts
We propose a model of trade agreements for which procurement is costly and, therefore, the optimal agreement may be incomplete. Despite its simplicity, the model provides many predictions about the structure of the optimal trade agreement and how it depends on the foundations of the contractual environment. We argue that explicit consideration of contractual costs can help explain a number of key features of actual trade agreements. If CitEc has detected a reference but no RePEc element has been linked to it, you can use this form to help you. If you have written this article and are not yet registered with RePEc, we recommend that you do so here. You can link your profile to this article. It also allows you to accept potential quotes on this article that we are not sure about. This paper benefited from helpful comments from Kyle Bagwell, Pierpaolo Battigalli, Gene Grossman, Elhanan Helpman, Robert Lawrence, Andres Rodriguez-Clare, Johan Stennek and seminar participants in Calgary, CEMFI, Canard Luigi Einaudi, Harvard, Minneapolis Fed, Penn State, Princeton, UBC, UCSD and Yale, as well as participants in an ERWIT conference and a conference at CREI (Pompeu Fabra University). Horn thanks for the financial support of the Marianne and Marcus Wallenberg Foundation. Maggi thanks the NSF (SES-0351586) and thanks the Duck Luigi Einaudi for his hospitality during part of this project. Staiger thanks the NSF for its financial support (SES-0518802).
The views expressed here are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. If you know that there are articles missing quoting this article, you can help us create these links by adding the relevant references in the same way as above for each referencing article. If you are a registered author of this article, you can also check the «Citations» tab in your RePEc Author service profile, as some citations may be waiting for confirmation. Please note that fixes may take a few weeks to go through the different RePEc services. Henrik Horn & Giovanni Maggi & Robert W. Staiger, 2010. «Trade Agreements as Endogenously Incomplete Contracts,» American Economic Review, American Economic Association, Vol. 100(1), pp.
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