POLI 243 Chapter Notes - Chapter 3: Nash Equilibrium, Strategic Dominance, Pareto Efficiency

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The political economy of international trade cooperation (chap 3 of book) The wto helps govs work together in pursuit of mutual gain. Trade often isn"t liberalised unilaterally; some sectors remain more protected than others. Bargaining- patience and outside option are strategies countries use, for ex in the. Doha round, to obtain info about other countries negotiating positions. Gov"s have different bargaining power: if they are patient (can walk away from a deal in order to get something better) and have outside options, they are considered to have leverage. Govs are reluctant to enter trade agreements because they cannot be sure that other members will comply with the agreement => enforcement pb. The international system provides no enforcement mechanism; it is anarchic. In the case of an iterated prisoners" dilemma, it is on the long term, so countries that care about future decisions will make different choices than a one-off. In this case, it is possible that both countries cooperate.

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