A Pareto Improvement in Customs Unions Without Intra-Union Transfer

Qi Ling () and Koji Shimomura
Additional contact information
Qi Ling: Central University of Economics and Finance

A chapter in International Trade and Economic Dynamics, 2009, pp 73-86 from Springer

Abstract: Kemp and Wan (1976) proved a theorem on the formation of customs unions: a common tariff vector can be found in the union such that there exists a Pareto improvement in the union without changing the international prices and the purchases from the rest of the world in the associated tariff-ridden competitive equilibrium. However, this Pareto-optimum may imply a tariff-ridden competitive equilibrium with an intra-union income transfer that does not seem to be very realistic. We give a strictly analytical proof to show that under some conditions on the tariff vector, the equilibrium can be established without intra-union income transfer and the utility of every country in the customs union can be improved when the customs union consists of three countries.

Keywords: Shadow Price; Pareto Frontier; Custom Union; Tariff Rate; Income Transfer (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:spr:sprchp:978-3-540-78676-4_9

Ordering information: This item can be ordered from
http://www.springer.com/9783540786764

DOI: 10.1007/978-3-540-78676-4_9

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().