As noted above, the performance of contractual obligations becomes inefficient when
the benefits to the promisee(s) of performance are less than the costs to the promisor of
performance. Joint gains then arise if the promisor does not perform, gains that can be
distributed ex ante or ex post in any manner that the parties prefer. Although this theory of
efficient performance and nonperformance has been developed with reference to private
contracts, where the costs and benefits of performance may be measured in money, it applies
equally to other bargains such as trade agreements. And the theory of public choice suggests
that the metric of welfare for each signatory to a trade agreement will not be money, but
instead will be the political welfare (votes, campaign contributions, graft, as the case may be)
of its political officials.14 Any Pareto optimal trade agreement must maximize a weighted sum
of this welfare measure for each signatory government.15 Implicit, then, in any optimal
agreement is a set of weights (called shadow prices by economists) that allow the political
welfare of one government to be traded off against the welfare of another.