Fear of Crowds in WTO Disputes: Why Don't More Countries Participate?

Abstract

WTO members that are aected by a trade dispute can join litigation as a third party and gain access to otherwise private negotiations. Participation has a negligible cost. Yet states rarely join cases as third parties, even when they have a material interest at stake. We construct a formal model of strategic third party participation in the WTO, and arrive at two testable implications. First, participants receive higher utility from dispute outcomes than nonparticipants. Second, despite this apparent advantage, the decision to participate raises the total number of third parties, which lowers the likelihood of early settlement. This creates strategic interdependence: as more states become third parties, the marginal benet of participation decreases and each state becomes less likely to join. We test our theoretical model by examining each country’s decision to participate or not in every WTO dispute since 1995. The ndings oer strong support for our model: states shy away from joining when it’s too crowded.