Signaling in Trade Agreements

21 Pages Posted: 4 Apr 2002

See all articles by Josh Ederington

Josh Ederington

University of Kentucky - Department of Economics

Phillip McCalman

University of California, Santa Cruz - Department of Economics

Date Written: March 2002

Abstract

In the paper, we show how the potential signaling properties of trade agreements can explain two notable features of the international trading system. First, many trade agreements involve gradual, rather than immediate, reduction of trade barriers. We demonstrate how gradualism can serve as a mechanism by which countries signal their ability to commit to future liberalization by cooperating with the current round of tariff negotiations. Second, there has been a recent emphasis on regional, as opposed to multilateral, trade liberalization. In this paper, we demonstrate that such preferential trade agreements can actually serve as "building blocks" to multilateral trade negotiations by allowing countries to signal their commitment to trade agreements.

Keywords: Trade agreements; Gradualism; Regional Agreements; Repeated Games

JEL Classification: F02, F13, F15

Suggested Citation

Ederington, Josh and McCalman, Phillip, Signaling in Trade Agreements (March 2002). Available at SSRN: https://ssrn.com/abstract=304962 or http://dx.doi.org/10.2139/ssrn.304962

Josh Ederington (Contact Author)

University of Kentucky - Department of Economics ( email )

335 Business and Economics Building
Lexington, KY 40506
United States

Phillip McCalman

University of California, Santa Cruz - Department of Economics ( email )

Santa Cruz, CA 95064
United States
(831) 459-4381 (Phone)
(831) 459-5900 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
168
Abstract Views
1,617
rank
175,390
PlumX Metrics