Institutions help states to move from the Pareto suboptimal outcome of protectionism to the Pareto optimal outcome of free and open trade by providing
A) assurances.
B) member status.
C) interdependencies.
D) contracts.

Question

Quizplus · Accepted Answer

Institutions can provide assurances to states that free trade will benefit both parties, by establishing rules and mechanisms for dispute resolution. This can help overcome fears of exploitation and unequal gains, and lead states to pursue free and open trade instead of protectionism. Member status, interdependencies, and contracts may also play a role in facilitating free trade, but they are not the most fundamental or necessary features of institutions for this purpose.

Institutions Help States to Move from the Pareto Suboptimal Outcome