National Treatment at the WTO: The Roles of Product and Country Heterogeneity

30 Pages Posted: 22 Oct 2008

See all articles by Kamal Saggi

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Nese Sara

affiliation not provided to SSRN

Abstract

This paper analyzes the World Trade Organization's (WTO's) national treatment (NT) clause in a two-country model where quality of goods and/or market size are heterogenous across countries. When market size is symmetric across countries, a reciprocal NT agreement (i) benefits the high-quality country; (ii) hurts the low-quality country; and (iii) delivers higher aggregate world welfare. However, such an agreement can arise in equilibrium if the high-quality country's market is relatively bigger and the quality gap between goods is small (i.e., goods are sufficiently alike). The qualitative nature of these results does not change when quality is endogenously determined.

Suggested Citation

Saggi, Kamal and Sara, Nese, National Treatment at the WTO: The Roles of Product and Country Heterogeneity. International Economic Review, Vol. 49, Issue 4, pp. 1365-1394, November 2008, Available at SSRN: https://ssrn.com/abstract=1287424 or http://dx.doi.org/10.1111/j.1468-2354.2008.00515.x

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3274 (Phone)
214-768-1821 (Fax)

Nese Sara

affiliation not provided to SSRN

No Address Available

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