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What is litigation in the WTO worth?

Bechtel, Michael and Sattler, Thomas (2013) What is litigation in the WTO worth? International Organization . ISSN 0020-8183 (In Press)

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Abstract

Conventional wisdom holds that the creation of international, court-like institutions helps countries to peacefully settle trade conflicts, thereby enhancing welfare through trade. Others, however, point out that these institutions remain ultimately ineffective, because their alleged effects merely reflect the distribution of power in the anarchic international system. We explore how litigation in the World Trade Organization (WTO) affects bilateral trade relations between countries involved in a trade dispute. We find that sectoral exports from complainant countries to the defendant increase by about $9.5 billion in the three years after a panel ruling. However, countries that have proactively fled a complaint and carried the costs of litigation do not systematically gain more than far less active third parties that merely joined an existing WTO dispute and carried considerably smaller litigation costs. We conclude that international judicial institutions create incentives for freeriding, but at the same time may lead to a less power-based distribution of the gains from trade.

Item Type: Article
Official URL: http://journals.cambridge.org/action/displayJourna...
Additional Information: © 2013 The Author
Library of Congress subject classification: H Social Sciences > HF Commerce
J Political Science > JA Political science (General)
J Political Science > JX International law
J Political Science > JZ International relations
Journal of Economic Literature Classification System: F - International Economics > F1 - Trade
F - International Economics > F5 - International Relations and International Political Economy
Sets: Departments > International Relations
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 13 Nov 2013 09:16
URL: http://eprints.lse.ac.uk/54197/

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