The Most-Favored Nation clause (MFN) forbids Members of a trade agreement to discriminate between trading partners. It … agreements in the World Trade Organization. There seems to be a rather widespread belief among policy makers that there are …

We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may … be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade … explicitly into account can help explain a number of key features of real trade agreements. …