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Kyle Bagwell
Journal Articles

Trade policy under monopolistic competition with firm selection

Kyle Bagwell, Seung Hoon Lee
Journal of International Economics , 2020

We analyze unilateral, efficient and Nash trade policies in a symmetric, two-country version of the Melitz-Ottaviano (2008) model. Starting at global free trade, we show that a country gains from the introduction of (1) a small import tariff; (2) a small export subsidy, if trade costs are low and the dispersion of productivities is high; and (3) an appropriately combined small increase in its import and export tariffs. The welfare of its trading partner, however, falls in each of these three cases.

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Journal Articles

Multilateral Trade Bargaining: A First Look at the GATT Bargaining Records

Kyle Bagwell, Robert W. Staiger, Ali Yurukoglu
American Economic Journal: Applied Economics , 2020

This paper empirically examines recently declassified tariff bargaining data from the GATT/WTO. Focusing on the Torquay Round (1950–1951), we document stylized facts about these interconnected high-stakes international negotiations that suggest a lack of strategic behavior among the participating governments and an important multilateral element to the bilateral bargains.

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Journal Articles

Money burning in the theory of delegation

Manuel Amador, Kyle Bagwell
Games and Economic Behavior , 2020

This paper uses a Lagrangian approach to provide sufficient conditions under which money burning expenditures are used in an optimal delegation contract. For comparison, we also establish simple sufficient conditions for the optimality of a cap allocation under a restricted set of preferences for a benchmark setting in which money burning is not allowed. We also apply our findings to a model of cooperation and to a model with quadratic preferences and families of distribution functions. In addition, we provide several comparative statics results.

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Journal Articles

“Nash-in-Nash” tariff bargaining

Kyle Bagwell, Robert W. Staiger, Ali Yurukoglu
Journal of International Economics , 2020

We provide an equilibrium analysis of the efficiency properties of simultaneous bilateral tariff negotiations in a three-country model of international trade. We consider the setting in which discriminatory tariffs are allowed, and we utilize the “Nash-in-Nash” solution concept of Horn and Wolinsky (1988). We allow for a general family of political-economic country welfare functions and assess efficiency relative to these welfare functions.

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