ABSTRACT
This chapter focuses on the major commercial policies faced by states — tariff reciprocity, most-favored-nation agreements, empires and trading blocs — and demonstrates the deductive links between these policies and changes in national income. It collects these analyses together to form the hypotheses that will be tested against the historical cases. The chapter summarizes the differences between the hypothesis and those offered by earlier explanations of economic closure. Systemic binding is advanced by policies that increase the value of mutual free trade and decrease the value of unilateral defection and mutual defection. Contingent discrimination is enhanced by policies that force states to make the above comparison of payoffs. Bilateral trade agreements that are limited to mutual tariff reductions can be seen as the creation of a free trade area: internally, states pledge free, or freer, trade, while each member continues to independently set its commercial policies with other states.
