some other objective (that is freer trade, unweighted domestic welfare, or global welfare). In fact, such an outcome seems likely in many cases, as our empirical examples illustrate.
The key general lesson from this analysis is that, when designing trade agreements that restrict policies of individual governments, care should be taken to recognize the endogenous nature of policy determination, and things should not be taken as given when they are not. In the context of multinational agreements, rules should be chosen with due regard to incentive compatibility if the objective is to force policies to adjust towards freer trade and enhanced domestic and global social welfare. In a GATT agreement that imposes few restrictions on domestic policy use, and partial restrictions on instruments used at the border, there is ample scope for perverse outcomes and good reason to expect them to proliferate.
Alston, J. M., and C. A. Carter. 1991. "Causes and Consequences of Farm Policy". Contemporary Policy Issues IX: 107-121.
Alston, J. M., and J. Spriggs. 1994. "Endogenous Policy and Supply Management in a Post-GATT World". Invited paper presented at the conference on "Supply Management in Transition Towards the 21st Century, " Macdonald Campus of McGill University, Ste-Anne-de-Bellevue, Québec, Canada (revised January, 1995).