Abstract:
Discrimination is generally conceived of as a feature of protectionism
and the source of retaliatory spirals. In this paper, I argue
that this perspective on trade discrimination is conceptually
and empirically deficient. The extent of discrimination is almost
exclusively considered with respect to the form of cooperation,
that is, the number of countries that cooperate. This view disregards
the fact that the bargaining approach also determines the extent
to which a country can discriminate in concession-making. By
neglecting the bargaining method, the existing literature tends
to underestimate the prevalence of discriminatory treatment in
international trade and in periods of liberalization in particular.
Furthermore, a case study of the government procurement negotiations
at the Uruguay Round shows that discrimination between countries
and items may go along with and actually promote liberalization.
On the basis of these insights, I make a first step toward a
better understanding of discrimination by developing a baseline
model explaining liberalization through discrimination.
