TY  - JOUR
AU  - Horn,Henrik
AU  - Maggi,Giovanni
AU  - Staiger,Robert W.
TI  - Trade Agreements as Endogenously Incomplete Contracts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12745
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12745
L1  - http://www.nber.org/papers/w12745.pdf
N1  - Author contact info:
Henrik Horn
Research Institute of Industrial Economics
Box 55665, SE-102 15 Stockholm, Sweden
E-Mail: henrik.horn@econ-law.se

Giovanni Maggi
Department of Economics
Yale University
37 Hillhouse Avenue Rm 27
New Haven, CT 06511
Tel: 203/432-3569
Fax: 203/432-6323
E-Mail: giovanni.maggi@yale.edu

Robert W. Staiger
Department of Economics
The University of Wisconsin
1180 Observatory Drive
Madison, WI  53705
Tel: 608/262-2265
Fax: 608/263-3876
E-Mail: rstaiger@wisc.edu
AB  - We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements.
ER  -