Political economy of preferencial trade agreement

Daniel Augusto Motta ()

Brazilian Journal of Political Economy, 2007, vol. 27, issue 2, 193-208

Abstract: The purpose of this paper is to analyse the political economy of preferential trade agreements based on a sequential non-cooperative Stackelberg political game between a large economy and a small one, in which the political dispute of rival lobby groups defines the unilateral stance of both governments in the first stage and the Stackelberg “coalition-proof” equilibrium defines t the free trade agreement format in the second stage. Finally, a few modifications in the initial game structure are discussed in order to enhance the small economy’s negotiation power. The political economy model is applied to FTAA case. JEL Classification: F02, F13, F15.

Keywords: FTAA; political economy; bargaining; non-cooperative games (search for similar items in EconPapers)
Date: 2007
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