An Oligopolistic Theory of Regional Trade Agreements

Christian Soegaard

No 270542, Economic Research Papers from University of Warwick - Department of Economics

Abstract: Why are trade agreements regional? I address this question in a model of oligopoly featuring product variety. Tariffs have the effect of manipulating a country’s terms of trade and shifting profits towards the domestic market at the expense of foreign trade partners. Countries endogenously form into regional trade agreements or global free trade in a framework where any agreement must be sustained by repeated interaction. A crucial parameter determining the degree of regionalism is product variety. I demonstrate that for a given trade cost and discount factor, increases in product variety leads to greater scope for global free trade relative to regional trade agreements.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 46
Date: 2013-05-21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://ageconsearch.umn.edu/record/270542/files/twerp_1007.pdf (application/pdf)
https://ageconsearch.umn.edu/record/270542/files/twerp_1007.pdf?subformat=pdfa (application/pdf)

Related works:
Working Paper: An Oligopolistic Theory of Regional Trade Agreements (2014)
Working Paper: An Oligopolistic Theory of Regional Trade Agreements (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:270542

DOI: 10.22004/ag.econ.270542

Access Statistics for this paper

More papers in Economic Research Papers from University of Warwick - Department of Economics
Bibliographic data for series maintained by AgEcon Search ().