Global Free Trade is in the Core of a Customs Union Game

Hideo Konishi, Carsten Kowalczyk and Tomas Sjostrom
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Carsten Kowalczyk: Fletcher School, Tufts University

No 685, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper shows nonemptiness of the core of a customs union game with a status quo equilibrium with tariffs by employing an appropriate notion of the core as in Kowalczyk and Sjöström (1994, Economica). Specifically, we find that if customs unions may have no effects on non-member countries as in Ohyama (1972, Keio Economic Studies) and Kemp and Wan (1976, Journal of International Economics) then a subset of countries forming such a customs union does not block global free trade when accompanied by so-called Grinols transfers (Grinols, 1981, Journal of International Economics).

Keywords: customs unions; game theory; free trade (search for similar items in EconPapers)
JEL-codes: F11 F13 (search for similar items in EconPapers)
Date: 2008-06-19
New Economics Papers: this item is included in nep-gth and nep-int
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Citations: View citations in EconPapers (3)

Published, Review of International Economics 17, 304-309, 2009, (special issue in memory of Koji Shimomura

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