Trade Agreements vs. Unilateral Tariff Reductions: Evidence from Modeling with a Continuum of Goods

Patrick J Conway, Dennis R Appleyard and Field, Alfred J,

International Economic Review, 1989, vol. 30, issue 4, 775-94

Abstract: The relative merits of preferential trading agreements and unilateral tariff reduction are investigated, yielding the conclusion that preferential agreements are superior for plausible specifications of tastes and endowments. The attractiveness of agreements, however, depends crucially on general-equilibrium effects on intraunion and external terms of trade. Game-theoretic differences between the alternative policy strategies are emphasized: agreements are cooperative equilibria while unilateral action defines a noncooperative Stackelberg equilibrium. The analytical framework is a three-country variant of the Dornbusch-Fischer-Samuelson classical trade model. Numerical simulations also illustrate that agreements may enhance government revenue and "learning-by-doing." Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1989
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://links.jstor.org/sici?sici=0020-6598%2819891 ... O%3B2-A&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

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:ier:iecrev:v:30:y:1989:i:4:p:775-94

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and ().