The endogenous formation of sustanaible trade agreements

Mette Ersbak Bang Nielsen ()

Revista de Economía del Rosario, 2006, No 3590

Abstract: This paper addresses the endogenous formation of trade agreements in a three - country model of imperfect competition. While the requirement of sustainability of preferential trade areas has often been ignored in the literature, I construct a framework for predicting which trade agreements form when sustainability is explicitly included as a constraint on the formation of the cooperative agreements. It is found that the introduction of a self-enforcement requirement reduces the overall scope for a cooperative trade agreements, and that preferential trade areas can be stepping stones or stumbling blocks depending on the size of relative demand between countries.

Keywords: trade agreements; customs unions; FTAs (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:col:000151:003590

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