Abstract
This paper analyzes GATI' and its dispute settlement procedure (DSP) in the context of a supergame model of international trade featuring both explicit and implicit agreements. An explicit agreement, such as OAT!', may be violated at some positive cost in addition to retaliatory actions that might be induced by the violation. We interpret this cost as arising from 'international obligation, a phenomenon frequently mentioned in the legal literature on GAY!'. We focus on how international obligation affects two aspects of GAIT-DSP: unilateral retaliation and the effect of inordinate delays in the operation of DSP. Marie Thursby Dan Kovenock Department of Economics Department of Economics Krannert Graduate School of Management Krannert Graduate School Purdue University of Management West Lafayette, IN 47907 Purdue University and NBER West Lafayette, IN 47907
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