International Market Access Rights: Introducing a - New - Institutional Economics Approach to International Trade Policy

Journal of Institutional and Theoretical Economics, Forthcoming

38 Pages Posted: 30 Nov 2006

See all articles by Carsten Herrmann-Pillath

Carsten Herrmann-Pillath

Max Weber Center for Advanced Cultural and Social Studies

Abstract

Recently, equilibrium analysis has gained considerable ground against institutional economics in the field of explaining international trade policy. This paper argues against this trend, picking up the strand of thought originating in seminal contributions such as the Yarbroughs (1992), and argues that the power of the institutional approach only comes fully into play if a new analytical category is introduced, which relates explicitly to the exchange of market access among governments, i.e. market access rights, MARs. Tariffs, quotas, standards, border controls etc. are all treated as institutional forms and special cases of MARs, whose prevalence depends on the motivations of governments to create those forms and on the functional requirements to make successful transactions on the market for MARs possible. I show that major aspects of the international trade system can be explained as institutional solutions to specific problems in transacting MARs, such as the MFN as a mechanism to internalize externalities, and the rules governing safeguards and retaliation as procedures of continuous renegotiation of MARs with changing value. Occam's razor does not apply for MARs, because their introduction allows to put a theoretical footing under widespread beliefs that the analysis of trade policy should be more concerned with power balances among countries, negotiation strategies and conditions for a successful completion of international contracting, and the embeddedness of trade in more complex socio-political relations.

Keywords: International economic organization, regulation of market access, WTO as a market for market access rights, power balances among nations

JEL Classification: F10, B25

Suggested Citation

Herrmann-Pillath, Carsten, International Market Access Rights: Introducing a - New - Institutional Economics Approach to International Trade Policy. Journal of Institutional and Theoretical Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=948154

Carsten Herrmann-Pillath (Contact Author)

Max Weber Center for Advanced Cultural and Social Studies ( email )

Nordhäuserstr. 74
Erfurt, 90228
Germany

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