Can Bilateral Trade Agreements Help Induce Free Trade

Raymond Riezman

Canadian Journal of Economics, 1999, vol. 32, issue 3, 751-766

Abstract: In this paper, a very simple question is asked. Does the fact that trading blocs can form bilateral trade agreements make free trade less likely to occur? The answer is that it depends on the size distribution of the trading blocs. When there is one large trading block along with some smaller ones, then bilateral trade agreements can facilitate the attainment of free trade. If trading blocs are of roughly equivalent size, then bilateral trade agreements allow groups of trading blocs to more effectively monopolize world trade, in which case they may make free trade less likely.

Date: 1999
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