Capacity and concessions : bargaining power in multilateral negotiations

Abstract

Realism and liberalism disagree over the source of bargaining power in international relations. Realists believe that the success of a negotiator is a linear function of the capabilities that its home state possesses. Liberals stress the crucial importance of either the relative salience a country attaches to a contested issue or the importance negotiating governments have to attribute to powerful domestic actors. In this essay, I clarify some of the channels through which these different facets of power influence multilateral negotiations. To examine the competing theoretical claims in international negotiations, I rely on the canonical contribution to the formal theory of bargaining, the Nash Bargaining Solution (NBS), as the unifying analytical framework. I distinguish several causal mechanisms through which varying forms of resources affect the negotiation outcomes. The formal analysis points out severe limitations of the thesis that different forms of bargaining power are fungible. Whether different facets of power can be substituted at all depends on how specific a channel is through which power is exerted. The empirical application uses the saliency approach as the baseline model and compares it with a realist capability and a liberalist domestic politics model. The analysis of the Uruguay round negotiations in the tourism sector shows that the realist bargaining model outperforms the domestic politics model. The saliency version of the NBS on which the competing models are based also fares relatively well in forecasting the concessions that 29 member states made in this policy realm.