Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71099
Authors: 
Dluhosch, Barbara
Horgos, Daniel
Year of Publication: 
2012
Series/Report no.: 
Diskussionspapier, Helmut-Schmidt-Universität, Fächergruppe Volkswirtschaftslehre 116
Abstract: 
In international relations, short-run incentives for non-cooperation often dominate. Yet, (external) institutions for enforcing cooperation are hampered by national sovereignty, supposedly strengthening the role of selfenforcing mechanisms. This paper examines their scope with a focus on contingent protection aka tit-for-tat in trade policy. By highlighting various strategies in a (linear) partial-equilibrium framework, we show that retaliation of noncooperative behavior by limiting market access works as a disciplining device independently of supply and demand parameters. Our theoretical results are backed by empirical evidence that countries more frequently involved in WTO-mediated disputes entailing tit-for-tat strategies pursue on average more liberal trade regimes.
Subjects: 
Int. Political Economy
Trade Policy Conflicts
Tit-for-Tat
WTO Dispute Settlement
JEL: 
F13
F51
D74
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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