Current trade theory argues that countries pursue bilateral trade agreements to escape from a terms-of-trade driven prisoners' dilemma. This paper offers an empirical test of the theory. Using simulation results from a quantitative trade model of North America I show that the non-cooperative and...

Despite their complexity, existing policy evaluation methods ignore many features of the real world that are pertinent for welfare analysis of trade policy. The main limitation of these technics is that they are static, which means they ignore important dynamic consequences of trade...