DAN Management Brown Bag Series
March 17, 2017
1:00 - 2:00 pm
This paper examines the rationale for deep integration in the world trading system. Deep integration refers to international trade agreements that target a variety of domestic (“behind-the-border”) policies in addition to traditional border measures, like tariffs. I develop a model where national policy-makers can use tariffs and non-border measures in pursuit of their political goals. The government must balance welfare considerations, lobbying efforts and credibility issues. The model supports, as an optimal development, the gradual spread of deep integration, but only after traditional terms-of-trade considerations have been addressed by tariff restrictions. This result is consistent with observed patterns of international trade agreements.
Open to all Faculty and Staff