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It's mostly a free-rider problem, which means there are mixed motives.

At least according to orthodox economics, free-ridetrade unhindered by customs duties, quotas and measures of equivalent effect, benefits all participating economies. The theory behind this is based on economies of scale and comparative advantages.

However, in the real world, governments succumb to protectionist pressures by domestic industries that would not be competitive in a free trade regime. Governments would still like to promote domestic industries' access to foreign markets, but at the same time they want to shield them from competition.

In other words, in parallel with the collective benefits from free trade, there are individual incentives for protectionism. In the short run, the latter tend to override the former, at least from the perspective of a government facing pressure from vested interests and looking to the next election.

Now, if all governments abide by this logic, there will be no free trade regime. Hence the need for international agreements with effective monitoring and enforcement structures.

It's mostly a free-rider problem, which means there are mixed motives.

At least according to orthodox economics, free-ride unhindered by customs duties, quotas and measures of equivalent effect, benefits all participating economies. The theory behind this is based on economies of scale and comparative advantages.

However, in the real world, governments succumb to protectionist pressures by domestic industries that would not be competitive in a free trade regime. Governments would still like to promote domestic industries' access to foreign markets, but at the same time they want to shield them from competition.

In other words, in parallel with the collective benefits from free trade, there are individual incentives for protectionism. In the short run, the latter tend to override the former, at least from the perspective of a government facing pressure from vested interests and looking to the next election.

Now, if all governments abide by this logic, there will be no free trade regime. Hence the need for international agreements with effective monitoring and enforcement structures.

It's mostly a free-rider problem, which means there are mixed motives.

At least according to orthodox economics, free-trade unhindered by customs duties, quotas and measures of equivalent effect benefits all participating economies. The theory behind this is based on economies of scale and comparative advantages.

However, in the real world, governments succumb to protectionist pressures by domestic industries that would not be competitive in a free trade regime. Governments would still like to promote domestic industries' access to foreign markets, but at the same time they want to shield them from competition.

In other words, in parallel with the collective benefits from free trade, there are individual incentives for protectionism. In the short run, the latter tend to override the former, at least from the perspective of a government facing pressure from vested interests and looking to the next election.

Now, if all governments abide by this logic, there will be no free trade regime. Hence the need for international agreements with effective monitoring and enforcement structures.

Source Link

It's mostly a free-rider problem, which means there are mixed motives.

At least according to orthodox economics, free-ride unhindered by customs duties, quotas and measures of equivalent effect, benefits all participating economies. The theory behind this is based on economies of scale and comparative advantages.

However, in the real world, governments succumb to protectionist pressures by domestic industries that would not be competitive in a free trade regime. Governments would still like to promote domestic industries' access to foreign markets, but at the same time they want to shield them from competition.

In other words, in parallel with the collective benefits from free trade, there are individual incentives for protectionism. In the short run, the latter tend to override the former, at least from the perspective of a government facing pressure from vested interests and looking to the next election.

Now, if all governments abide by this logic, there will be no free trade regime. Hence the need for international agreements with effective monitoring and enforcement structures.