OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


Trade-Related International Regulatory Co-operation

A Theoretical Framework

This report provides a conceptual foundation for the analysis of international regulatory co-operation (IRC) and its potential benefits through reduced trade costs. Different forms of IRC aiming to reduce specification, conformity assessment and information costs - which can arise from regulatory heterogeneity, costly conformity assessment procedures and insufficient regulatory transparency – are addressed. The report argues that trade costs need to be balanced against the regulatory objectives of mitigating various market imperfections. Integrating these two elements often allows significant gains in terms of national welfare, gains that can be augmented by negotiated outcomes among trading partners. IRC may also have important effects on trade with third countries. Related welfare implications are, however, ambiguous and depend on the specifics of the IRC outcome as well as on third countries’ own regulations.


Keywords: specification costs, game theory, trade costs, conformity assessment costs, regulation, information costs, Nash equilibrium
JEL: K23: Law and Economics / Regulation and Business Law / Regulated Industries and Administrative Law; D61: Microeconomics / Welfare Economics / Allocative Efficiency; Cost-Benefit Analysis; C72: Mathematical and Quantitative Methods / Game Theory and Bargaining Theory / Noncooperative Games; C71: Mathematical and Quantitative Methods / Game Theory and Bargaining Theory / Cooperative Games; L51: Industrial Organization / Regulation and Industrial Policy / Economics of Regulation; F13: International Economics / Trade / Trade Policy; International Trade Organizations; C73: Mathematical and Quantitative Methods / Game Theory and Bargaining Theory / Stochastic and Dynamic Games; Evolutionary Games; Repeated Games; D60: Microeconomics / Welfare Economics / Welfare Economics: General
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