Why are Trade Agreements Regional?

Research, Preprint OPEN
Zissimos, Ben;
  • Publisher: Milano: Fondazione Eni Enrico Mattei (FEEM)
  • Subject: Regionalism | Außenhandelsliberalisierung | Trade Liberalization | Coalition, Coordination, Regionalism, Preferential Trade Agreement, Trade Liberalization | F02 | F13 | F15 | Coordination | Preferential Trade Agreement | Koordination | Optimalzoll | Coalition | Handelsregionalismus | Theorie | C72
    • jel: jel:F02 | jel:F13 | jel:C72 | jel:F15
      ddc: ddc:330

This paper shows how distance may be used to coordinate on a unique equilibrium in which trade agreements are regional. Trade agreement formation is modeled as coalition formation. In a standard trade model with no distance between countries, a familiar problem of coord... View more
  • References (6)

    [1] Aghion, P., P. Antras and E. Helpman (2007); “Negotiating Free Trade.” Journal of International Economics 73: 1-30.

    [2] Arnold, T. and M. Wooders (2005); “Dynamic Club Formation with Coordination.” Vanderbilt University Department of Economics Working Paper No. 05-W22.

    [3] Bagwell, K. and R. Staiger (1997a); “Multilateral Tariff Cooperation During the Formation of Regional Free Trade Areas.” International Economic Review, 38: 291-319.

    [4] Bagwell, K. and R. Staiger (1997b); “Multilateral Tariff Cooperation During the Formation of Customs Unions.” Journal of International Economics, 42: 91-123.

    [5] Bagwell, K. and R. Staiger (1998); “Will Preferential Arrangements Undermine the Multilateral Trading System?” Economic Journal 108(449): 1162-1182.

    [6] Baier, S.L. and J.H. Bergstrand (2004); “Economic Determinants of Free Trade Agreements.” Journal of International Economics, 64: 29-63.

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