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dc.contributor.authorDeardorff, Alan V.en_US
dc.description.abstractIn this paper I argue that profit-maximizing firms, even though they contribute to socialwelfare when they compete in the market, may not do so when they influence the politicalprocess. In particular, I suggest, through several examples from both the real world and fromeconomic theory, that corporations have played a significant role in the formulation of therules of the international trading system. They did this in the formation of the WTO, wherethey were responsible for the expansion to cover both intellectual property and services. Andthey do this in preferential trading arrangements such as the NAFTA, where they inserted thenotorious Chapter 11 and specified rules of origin for automotive products. All of this is quiteconsistent with economic theory, including the literature on the political economy of tradepolicy. I also use a simple duopoly model to illustrate a domestic firm's interest in settingrules of origin. The corporate influence on rules need not be bad, but there is no reason why itshould be good either, as these examples illustrate.en_US
dc.publisher|aCenter for Economic Studies and Ifo Institute (CESifo) |cMunichen_US
dc.relation.ispartofseries|aCESifo Working Paper |x1301en_US
dc.subject.keywordpolitical economy of tradeen_US
dc.subject.keywordtrade institutionsen_US
dc.subject.stwInternationale Wirtschaftsorganisationen_US
dc.subject.stwPublic Choiceen_US
dc.subject.stwWorld Trade Organizationen_US
dc.subject.stwNorth American Free Trade Agreementen_US
dc.titleWho makes the rules of globalization?en_US
dc.typeWorking Paperen_US

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