Free Trade Networks on Non-tariff Barriers

Yasunori Okumura

Journal of Industry, Competition and Trade, 2015, vol. 15, issue 3, 223-238

Abstract: In this paper, we examine the formation of free trade agreements on eliminating non-tariff barriers as a network formation game. A firm faces an import volume quota in a foreign country, which it cannot exceed but can be removed through bilateral free trade agreements. We focus on the stable free trade agreements networks, considering the case where each country determines the quotas of the foreign firms. We show that global free trade may not be achieved in any stable network. Moreover, all countries may be autarkic in a stable network. Finally, we demonstrate that our main results continue to hold regardless of the type of non-tariff barriers, such as import licences, import share quotas, and technical measures for increasing the production costs of foreign firms. Copyright Springer Science+Business Media New York 2015

Keywords: Free trade agreements; Non-tariff barriers; Network formation; Cournot; F13; F12; D85 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:15:y:2015:i:3:p:223-238

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DOI: 10.1007/s10842-014-0184-2

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