capacity utilization rates, or concentration ratios and political contributions.22 Unfortunately, the
industry-level time series of data necessary for our analysis is not readily available and would require
a substantial commitment to data collection that is beyond the scope of the current project. Thus
we attempt to account for these political-economic features with our SECTOR, DEFENDANT and
MEASURE controls, with the associated caveat that this is a limitation of the current study.
This data collection approach leaves us with 174 trade dispute observations for which we have
sufficient data for the t − 1 to T + 3 period. Tables 1 and 2 illustrate the summary statistics and
other features of the data used in the estimation.
3.3 Additional Estimation Issues
We conclude this section with a brief discussion of potential omissions from our data set and the
associated implications for the estimation. While we are essentially looking at the relevant population
of dispute settlement activity under the GATT/WTO, this is admittedly only a sample of
GATT/WTO-inconsistent policies that governments undertake. There are surely other examples of
GATT/WTO-inconsistent policies that have not been brought to the dispute settlement provisions
and thus aren’t part of our data set. While Horn et al. (1999) have provided evidence that there does
not appear to buy a bias in trade dispute initiation under the WTO; nevertheless, here we discuss
briefly the characteristics of potential unreported activity and comment on whether its omission is
likely to introduce bias into the estimation and thus affect the interpretation of our results.
First consider the typical characteristics of GATT/WTO-inconsistent activity that would take
place without being reported. A potential plaintiff (i.e., a country facing a deterioration of market
access conditions of a trading partner, relative to what it expected) would not initiate a dispute even
in the face of a GATT/WTO-inconsistent policy if the expected gain from dispute initiation were
smaller than the cost. This is more likely if (i) the gains to the plaintiff from the defendant actually
removing the GATT/WTO-inconsistent policy are small, (ii) the probability of the defendant actually
removing the GATT/WTO-inconsistent policy is small, and (iii) the costs to the plaintiff for pursuing
a case are large.23 We consider the implication of each issue in turn.
First, assume that our data set systematically omits GATT/WTO-inconsistent activity that, if