Three essays on international agreements on trade policies

The first chapter examines export and domestic subsidies of competitive industries in the presence of political considerations. When exporting governments have both trade policy and domestic production policy at their disposal, export subsidies are never realized in the Nash equilibrium regardless of the degree of political considerations. Positive export and domestic subsidies can be utilized at the same time only if there exists a concern over a political cost of public funds. A multilateral reduction in subsidies benefits the exporting countries, since they can exit the Prisoner's Dilemma associated with the terms-of-trade externality.; The second chapter examines the role of the MFN principle in the GATT/WTO in a simple oligopolistic model where trade policy and locations of exporting firms between a high-wage and a low-wage country are endogenously determined. Without commitment to MFN, firms refrain from building export platforms offshore, anticipating a high rate of tariff to be imposed after making irreversible investments. The importing country can gain by unilaterally committing to MFN since it encourages the anticipatory export-platform FDI.; The final chapter examines whether large countries have an incentive to manipulate their fixed-cost NTBs by changing domestic regulations when firms are heterogeneous in productivity. In the symmetric Nash equilibrium, each government has an incentive to unilaterally raise fixed-cost NTBs at the expense of the other country. The existence of this negative externality implies that governments may benefit from a reciprocal international agreement to reduce fixed-cost NTBs.