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A functioning enforcement mechanism is crucial to ensure the continued success of the GATT/WTO agreements. In this paper, I examine the WTO members’ dispute selection decisions to judge the effectiveness of the WTO’s enforcement institution, the Dispute Settlement Body. Previous research shows that measures of retaliatory capacity (GDP, trade volumes, export structure) correlate with the incidence of WTO disputes, but fails to account for a number of empirical facts, such as the steady drop in trade quarrels since the early 2000s. To explain the observed dispute pattern, I extend the WTO theory by incorporating a link between endogenous trade policy formation and agreement violation and dispute filing decisions. I show that countries are more likely to engage in trade disputes as complainants or defendants when they have a small “tariff overhang”, which represents the difference between bound tariffs (by WTO negotiations) and the actually applied tariffs. Lower tariff overhangs constrain WTO members’ policy flexibility to respond to adverse shocks, which I motivate in my model by sectoral productivity adjustments due to decreases in trade costs after successful trade negotiations. Guided by this theoretical framework, I present empirical evidence that tariff overhangs are an essential determinant of the WTO dispute pattern.

This paper considers the integration of economies as a merger of populations. The premise is that the merger of groups of people alters their social landscape and their comparators. The paper identifies the effect of the merger on aggregate distress. A merger is shown to increase aggregate distress, measured as total relative deprivation: the social distress of a merged population is greater than the sum of the social distress of the constituent populations when apart. Physiological evidence from neighboring disciplines points to an increase in societal stress upon merger.

Developing countries employ about two-fifth of the world's researchers, originate one quarter of world expenditures on R&D, and their inventions are subject to imitation. Nevertheless, the previous literature focuses on North–South setups in which the South is restricted to imitating northern inventions. To analyze the effects of IPR policies on developed and developing countries, we extend this literature to allow not only for southern innovation and imitation of northern goods, but also for imitation targeted at southern innovations. We find the effects of IPRs on R&D and welfare to be non-monotonic and dependent on innovation efficiency and an innovation threshold in the South. For sufficiently strong IPRs the South engages in original R&D and stronger IPRs promote southern innovation, welfare, and a reduction in the North–South wage gap. Below the threshold, a strengthening of IPR protection fails to promote innovation and decreases welfare. Stronger IPRs exclusively for southern firms can benefit both regions by shifting southern resources from the imitation of northern goods to original southern innovation.