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American Economic Review Vol. 96 No. 3 2006

Will International Rules on Subsidies Disrupt the World Trading System?

Kyle Bagwell1; Robert W. Staiger2

1 Department of Economics, Columbia University, 420 West 118th Street, New York, NY 10027, and National Bureau of Economic Research. · 2 Department of Economics, The University of Wisconsin, 1180 Observatory Drive, Madison, WI 53706, and NBER.

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Abstract

We provide a first formal analysis of the international rules that govern the use of subsidies to domestic production. Our analysis highlights the impact of the new subsidy disciplines that were added to GATT rules with the creation of the WTO. While GATT subsidy rules were typically viewed as weak and inadequate, our results suggest that the key changes introduced by the WTO subsidy rules may ultimately do more harm than good to the multilateral trading system by undermining the ability of tariff negotiations to serve as the mechanism for expanding market access to more efficient levels.

DOI
10.1257/aer.96.3.877
Volume
96
Issue
3
Pages
877-895
Language
en
Sources
bibtex:phds-export.bib openalex crossref bibtex:phds-export.bib

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