1 option
The Value of MFN Treatment / Madanmohan Ghosh, Carlo Perroni, John Whalley.
- Format:
- Book
- Author/Creator:
- Ghosh, Madanmohan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6461.
- NBER working paper series no. w6461
- Language:
- English
- Subjects (All):
- Commercial treaties.
- Commercial treaties--Econometric models.
- Favored nation clause--Econometric models.
- Favored nation clause.
- Trade blocs--Econometric models.
- Trade blocs.
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Cambridge, MA : National Bureau of Economic Research, 1998.
- Summary:
- We discuss most favoured nation (MFN) treatment in trade agreements, suggesting that its value to individual countries depends critically on the relevant model solution concept used to evaluate it. We analyze both rights to MFN treatment in foreign markets, and the obligation to grant MFN treatment in home markets; the heart of the post-war GATT/WTO multilateral trading system. In a traditional competitive equilibrium framework, MFN gives benefits to small countries in being able to free ride on bilateral tariff concessions exchanged between larger countries in GATT/WTO negotiating rounds. In a non-cooperative Nash equilibrium framework, MFN restrains retaliatory actions to be non-discriminatory. In a co-operative bargaining framework in which trade policies are jointly set, MFN changes the threat point and hence affects the bargaining solution. We use a calibrated numerical model of global trade in which we compute all three solution concepts and compare MFN and non MFN equilibria for each. We use the GTAP (1992) data base, concluding that quantitatively the most significant effect of MFN seems to be in its impact on bargaining rather than on competitive and Nash equilibrium solutions; being beneficial to smaller countries.
- Notes:
- Print version record
- March 1998.
The Penn Libraries is committed to describing library materials using current, accurate, and responsible language. If you discover outdated or inaccurate language, please fill out this feedback form to report it and suggest alternative language.