Bilateralism Is Good: Trade Blocs and Strategic Export Subsidies
Oxford Economic Papers, 1997, vol. 49, issue 4, 504-20
This paper considers the effect of exogenous trade bloc enlargement in a multicountry version of the Brander-Spencer export subsidy game. In the single-shot game, it is shown that trade bloc enlargement leads to a reduction in the Nash equilibrium export subsidies and thereby increases the welfare of the exporting countries. Although the welfare of the importing countries decreases, world welfare may increase if the export subsidies are financed by distortionary taxation. When the export subsidy game is infinitely repeated, it is shown that trade bloc enlargement reduces the critical discount factor making it easier to sustain free trade. Copyright 1997 by Royal Economic Society.
References: Add references at CitEc
Citations View citations in EconPapers (14) Track citations by RSS feed
Downloads: (external link)
http://links.jstor.org/sici?sici=0030-7653%2819971 ... 0.CO%3B2-7&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:oup:oxecpp:v:49:y:1997:i:4:p:504-20
Ordering information: This journal article can be ordered from
Access Statistics for this article
Oxford Economic Papers is currently edited by A. Banerjee and James Forder
More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Series data maintained by Oxford University Press ().