Externalities and Free Trade Agreements

F. Grafe and Ana Mauleon ()

ASSET - Instituto De Economia Publica from ASSET (Association of Southern European Economic Theorists)

Abstract: This paper studies the consequences of a private or depletable externality on free trade agreements in a general equiilibrium framework. It is shown that there always exists a stable system of free trade spaces in the world economy. This stable system can result in either non-cooperation, partial cooperation, or total cooperation among countries of different types.

Keywords: EXTERNALITIES; FREE TRADE; GENERAL EQUILIBRIUM (search for similar items in EconPapers)
JEL-codes: D51 D62 C62 (search for similar items in EconPapers)
Date: 1997
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