Publication

The author studies the design and implementation of trade agreements under the assumption that governments have private information about the fluctuating political pressure they face from domestic interest groups to restrict trade. The Dispute Settlement Body (DSB) of theWorld Trade Organization is modeled as an impartial entity that provides ‘recommendations’ for the resolution of disputes based on its imperfect observation of the state of the world. The novel feature of this paper's approach is to model post-ruling bargaining between the parties, who regard the recommendations of the DSB as a reference point.