| Chapter 1 explores the ability of countries to maintain multilateral cooperation during the formation of free-trade areas. We assume that countries are limited to self-enforcing multilateral agreements that balance the gains from defection against the consequences of an ensuing trade war. Our analysis is conducted within a managed-trade environment, in which countries are allowed to employ "special-protection" instruments, such as safeguards, in a cooperative equilibrium, when the aggregate trade volume surpasses a critical threshold. We find that countries can sustain a relatively low level of overall protection only once the free-trade agreements are in full effect. Prior to this, during the negotiation period, countries need to engage in heavy utilization of "special-protection" tools to sustain multilateral cooperation. Thus, we provide a novel link between regional trade agreements and managed trade.;Chapter 2 explores the ability of countries to maintain multilateral cooperation during the formation of customs unions. We assume that countries are limited to self-enforcing multilateral agreements that balance the gains from defection against the consequences of an ensuing trade war. Our analysis is conducted once again within a managed-trade environment, in which countries are allowed to employ "special-protection" instruments, such as antidumping protection, in a cooperative equilibrium, when the aggregate trade volume surpasses a critical threshold. We find that during the negotiation period, countries can sustain a relatively low level of overall protection, given the probability the customs unions will actually materialize is not too low. Nevertheless, once the customs unions are fully formed, countries need to engage in heavy utilization of "special-protection" tools so that multilateral cooperation does not break down.;Chapter 3 examines the timing of "echoing" antidumping cases. We develop a two-stage, three-period model in which two competing importers can choose to select their tariffs with respect to an exporting country in one of two periods. We assume that governments are politically motivated regarding their import-competing industries. We further assume that the degree of their political motivation, captured by a political-economy parameter, is private information. We find that the countries endogenously choose to pick their tariffs sequentially if and only if their political-economy parameters differ in relation to a common critical threshold. Otherwise, the countries prefer to select their tariffs simultaneously. |
