The MFN clause, welfare, and multilateral cooperation between countries of unequal size

• 成果类型: Article
• 署名作者: Saggi, Kamal
• 署名单位: Southern Methodist University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2008.01.006
• 发表日期: 2009
• 页码: 132-143
• 关键词: Most favored nation clause; Country income; welfare; Multilateral tariff cooperation; Tariff discrimination

摘要

This paper analyzes MFN in a competing exporters model of trade between three countries with unequal endowments and shows that MFN yields higher aggregate welfare than tariff discrimination even as it makes low income countries worse off. Furthermore, in a repeated game of tariff cooperation, multilateral free trade is easier to sustain under MFN punishments relative to discriminatory ones. This conclusion holds even when tariff discrimination takes the form of bilateral trade agreements. Overall, the analysis shows that from the viewpoint of low income countries, MFN and multilateral tariff cooperation are complementary in nature. (C) 2008 Elsevier B.V. All rights reserved.