The GATT/WTO and preferential trade agreements help member countries to achieve further gains from trade by promoting deeper trade liberalization. In general, free trade does not automatically follow from individualistic behavior. A major reason for this has to do with the existence of monopolistic power in trade.1 Trade liberalization requires that countries behave cooperatively and reciprocally. In certain circumstances, greater cooperation and reciprocity can only be achieved through multilateral trade agreements, as opposed to a web of bilateral trade agreements,2 and sustained through third-party punishments.
|Title of host publication||International economic policies in a globalized world|
|Editors||Seiichi KATAYAMA, Heinrich W. URSPRUNG|
|Place of Publication||Berlin|
|Number of pages||11|
|Publication status||Published - 2004|
Bibliographical noteWe benefitted from comments by Stephen Ching and participants at the International Conference on Greater China and the WTO, held in March 2001 in Hong Kong. Financial support from Hong Kong SAR Government (HKUST6214100H) is greatly acknowledged.
- Nash Equilibrium
- Trade Policy
- Trade Liberalization
- Consumer Surplus
- Pareto Improvement