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Why do member countries choose not to participate in the World Trade Organization’s Dispute Settlement Body?

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This study examines non-participatory membership in the WTO’s Dispute Settlement Body. It uses an extensive form game that models trade and dispute settlement, costs for litigation, and prisoner’s dilemma-like payoffs. The study finds that, with the same litigation costs, there is a pure subgame perfect Nash equilibrium where both states will engage in protectionism and avoid filing. If one state has a higher litigation cost, it can be locked out of recourse and be worse off than it would be ex ante. These results, however, do not capture third-party litigation; neither do they examine the inability to impose countermeasures.
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Keywords: Dispute settlement; litigation costs; non-participatory membership

Document Type: Research Article

Affiliations: Political Science Department, Middlebury College, Middlebury, Vermont, USA

Publication date: March 4, 2019

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