A 'New Trade' Theory of GATT/WTO Negotiations
I suggest a novel theory of GATT/WTO negotiations based on the Krugman (1980) "new trade" model. It emphasizes international production relocations and is easy to calibrate to bilateral trade data. Focusing on the major players in recent GATT/WTO negotiations, I find that it implies reasonable noncooperative tariffs as well as moderate gains from GATT/WTO negotiations.
I am grateful to the editor Sam Kortum and two anonymous referees. I would also like to thank Pol Antras, Kyle Bagwell, Gene Grossman, Chang-Tai Hsieh, Stephen Redding, Frederic Robert-Nicoud, John Romalis, Robert Staiger, and seminar participants at the LSE, Princeton University, WHU Koblenz, MPI Bonn, Oxford University, Columbia University, SSE Stockholm, IFN Stockholm, Munich University, UBC, University of Chicago, University of Toronto, UC San Diego, UC Berkeley, Yale University, IIES Stockholm, CREI/UPF Barcelona, University of Michigan, UCLA, LBS, the 2008 REStud Tour, the 2008 NBER ITI summer institute, Georgetown University, and the World Bank for very helpful comments and discussions. The usual disclaimer applies. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
“A “ New Trade ” Theory of GATT/WTO Negotiations” Journal of Political Economy 119(1):122 - 152 , February 2011 citation courtesy of