Do negotiated tariffs under the WTO deviate significantly from the first-best agreement? If so, why? To answer these questions, we consider two potential causes of deviation from the first-best in WTO negotiations: (i) a free-riding problem that may be caused by the WTO's nondiscrimination...

This paper takes a mechanism-design approach to characterize a politically optimal trade agreement under the assumption that governments have private information about the fluctuating political pressure they face from domestic interest groups to restrict trade. The optimal mechanism under these...