Araujo, Luis; Ornelas, Emanuel - IBMEC Business School - Rio de Janeiro - 2005
is the weak enforcement of international contracts. We develop a model in which agents build reputations to overcome this … programs. Moreover, while stricter enforcement of contracts enhances trade in the short run, it makes it harder for individual … sufficiently low initial levels of contract enforcement, a small tightening in enforcement reduces future trade flows. We find also …