This paper examines the rationale for the rules on domestic subsidies in international trade agreements through a … model shows that, under political pressures, the government will turn to subsidies when its ability to provide protection is … credibly commit vis-à-vis the domestic lobby unless the trade agreement also regulates production subsidies, thus addressing …

This paper investigates the efficient design of rules on domestic subsidies in a trade agreement. A clear trade …-off emerges from the economic literature. Weak rules may lead Member governments to inefficiently use domestic subsidies for … reduce policy makers' ability to use subsidies to offset domestic market distortions. Efficient subsidy rules are, therefore …