B. Peter Rosendorff

The Optimal Design of International Trade Institutions: Uncertainty and Escape

International institutions that include an escape clause generate more durable and stable cooperative international regimes, and are easier to achieve ex ante. The escape clause is endogenous in a model of repeated trade-barrier setting in the presence of symmetric, two-sided, political uncertainty. They permit, along the equilibrium path, countries to temporarily deviate from their obligations in periods of excessive, unexpected political pressure at some prenegotiated cost. The architects of international agreements optimally choose a cost so that escape clauses are neither too cheap to use (encouraging frequent recourse, effectively reducing the benefits of cooperation) nor too expensive (such that they are rarely used leading to an increased chance of systemic breakdown). The international institutions crucial role is one of an information provider (verifying that the self-enforcing penalty has been paid (voluntarily)), rather than one of enforcer coercing payment. Escape clauses also make agreements easier to reach initially. Their flexibility allows states to be reassured that the division of the long-term gains from the agreement is not immutable.

Too much of a good thing?: The proactive response dilemma

In a two-player proactive response game the level of proactive activity and the choice of terrorist target is endogenized. The targeted government first chooses its measures to weaken the terrorists, and the terrorists then choose the type of event—normal or spectacular. Unlike previous analyses, proactive policy has a downside by increasing grievances and, consequently, terrorist recruitment. If the government responds too harshly, its actions can empower the terrorists by providing a larger constituency. Aggressive antiterrorist actions, encouraged by a high perceived loss from terrorism and low marginal proactive costs, may result in spectacular events with dire consequences. If spectaculars are transferred abroad to soft targets, then proactive operations may be excessive from a global viewpoint as external costs are ignored. The analysis explains why some target nations engage in a modest level of offense but a prime target chooses a large level.

Democratic Politics and International Trade Negotiations

Elections affect both the probability of successful ratification and the terms of international trade agreements; domestic politics in its simplest form shapes international negotiations. Without elections, the extent of protection in a trade agreement increases with the degree of divided government, and the Schelling conjecture—whereby an international negotiator can point to a hawkish legislature to extract greater concessions from the foreign country—holds only when the legislature is not too hawkish. An election (where the executive anticipates the preferences of the legislature imperfectly) implies that when divisions in government rise, the probability of ratification failure increases, the expected outcome becomes more protectionist, and the executives influence vis-à-vis the foreign country declines, thus challenging the Schelling conjecture.

Stability and Rigidity: Politics and Design of the WTO's Dispute Settlement Procedure

The increased “legalization” embodied in the revised Dispute Settlement Procedure (DSP) of the World Trade Organization (WTO) is shown to be an institutional innovation that increases the opportunities for states to temporarily suspend their obligations in periods of unexpected, but heightened, domestic political pressure for protection. This increased flexibility in the system reduces per-period cooperation among states but also reduces the possibility that the regime may break down entirely. There is shown to be a trade-off between rigidity and stability in international institutional design in the face of unforeseen, but occasionally intense, domestic political pressure. In a model with a WTO that serves both an informational and adjudicatory role, it is established that agreements with DSPs are self-enforcing, are more stable, and are more acceptable to a wider variety of countries than agreements without DSPs. Evidence drawn from data on preferential trading agreements supports the key hypotheses.

Democracy and Transparency

Are democracies more transparent than other types of political regimes? Many people believe that the presence of elections alone is not sufficient for a country to be considered democratic and that transparency must be included as part of the definition of political regime. We agree that contestability of elections and transparency of policymaking are analytically distinct concepts. Adopting minimalist approaches to democracy and transparency, we ask a basic question: do electoral politics provide incentives for governments to disseminate data? We thus investigate theoretically the relationship between regime type and the willingness of policy makers to provide credible announcements on policy-relevant variables. And we demonstrate empirically that the availability (or absence) of policy-relevant data is correlated with regime type, even after controlling for GDP per capita, IMF participation, country fixed-effects, and time trends1. Democracies are indeed more transparent.

The Political Economy of Transnational Terrorism

Clearly, the events of September 11, 2001 (henceforth 9/11), heightened the publics awareness of the threat posed by modern-day terrorism. For global society, 9/11 was a defining moment for a number of reasons. First, the sheer magnitude of the attack and the resulting carnage of almost 3,000 killed were unprecedented in terms of terrorist attacks. Second, the associated financial losses and repercussions of

Strengthening International Courts and the Early Settlement of Disputes

80 to

Transparency, Protest, and Autocratic Instability

90 billion was far greater than those associated with the most catastrophic natural disaster to date (Kunreuther and Michel-Kerjan 2004). Financial consequences were particularly heavy on the airline industry, tourism, and insurance. Third, 9/11 aptly underscored the vulnerabilities of modern society to terrorist attacks that could use an everyday object to cause havoc and terror. Fourth, 9/11 created an ongoing financial commitment to homeland security that devours scarce resources. Fifth, 9/11 set the bar for future attacks as terrorists try to outdo the magnitude of past attacks to capture and maintain media attention. In their quest to eventually top 9/11, terrorists will resort to larger conventional attacks or even weapons of mass destruction, most likely chemical or radiological in nature. Another defining moment came on March 11, 2004 (henceforth 3/11), with the attacks on the Madrid commuter trains and stations where 191 died and more than 1,200 were injured. The events of 3/11 made clear that such callous and deadly attacks could occur virtually anywhere. Nations that support a prime-target nation, such as the United States, may itself become a venue for terrorism. The Madrid attacks also showed that a well-timed terrorist incident could have significant political ramifications. In addition, 3/11 demonstrated that terrorists will respond to security upgrades

A Gravity Model of Globalization, Democracy and Transnational Terrorism

How does variation in the strength of a court’s jurisdiction and enforcement affect strategic behavior by states involved in international disputes? The authors construct a formal model and identify three important ways that legal institutions can have a deleterious effect on international cooperation by magnifying the bargaining problems arising from incomplete information about the quality of the legal claims. First, strong courts create less information revelation in pretrial bargaining. Second, strong courts reduce the likelihood of pretrial settlements between states. Third, strong courts lead to more brinksmanship over high-value assets, which leads to conflict if the court refuses to intervene. The authors argue that a key policy implication of their model is that attempts to strengthen international courts must be accompanied by increased precision of international law to ameliorate the deleterious effects of strong courts.

SUICIDE TERRORISM AND THE BACKLASH EFFECT

The collapse of autocratic regimes is often brought about through large-scale mobilization and collective action by elements of the populace. The willingness of any given member of the public to participate in actions such as strikes and protests is contingent upon her beliefs about others’ willingness to similarly mobilize. In this article, we examine the effect of a specific form of transparency—the disclosure of economic data by the government—on citizen belief formation, and consequently on collective mobilization. We present a theoretical model in which, under autocratic rule, transparency increases the frequency of protests, and increases the extent to which protest is correlated with incumbent performance. We find empirical support for these claims. Transparency destabilizes autocracies via mass protest.