Cooperation in the liberalization of international trade: after hegemony, what?

Yarbrough, Beth V.; Yarbrough, Robert M.
January 1987
International Organization (00208183);Winter87, Vol. 41 Issue 1, p1
Academic Journal
Given the potential of international trade to be mutually beneficial and the existence of transaction and adjustment costs, nations engage in a variety of forms of trade liberalization (e.g., unilateral, multilateral, minilateral). The extent of transaction specific investment and the viability of hegemonic cooperation are determinants of the scope for opportunistic protectionism and. therefore, determinants of the form of successful liberalization. Trade-specific assets imply a vulnerability to opportunistic protectionism, imparting a Prisoner's Dilemma payoff structure to trade liberalization. The hypothesis of hegemonic stability implies that the presence of a hegemonic state is both necessary and sufficient for a liberal trading system; the hypothesis of hegemonic cooperation, on the other hand, implies that the presence of a hegemon is one possible way of breaking the Prisoner's Dilemma in the presence of substantial transaction-specific investment for trade. We use trade-specific assets and hegemonic cooperation to explain the historical variation in the forms of trade liberalization: unilateral by 19th-century Britain, multilateraI by the postwar United States, and minilateral more recently.


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