Inefficient Stable International Trade Networks

Daniel E. May

Studies in Microeconomics, 2015, vol. 3, issue 1, 13-34

Abstract: A recent study in the area of international trade networks found that global free trade (GFT) is pairwise stable. This finding has led to the conclusion that bilateralism is a building block for GFT. The current article uses an alternative stability concept to show that international networks other than GFT are the only stable networks when governments are politically biased. The main implication of this finding is that the use of bilateral agreements as a political tool to reach GFT can in fact lead to inefficient stable networks.

Keywords: International trade networks; global free trade; strongly pairwise stability; inefficient stable networks (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:sae:miceco:v:3:y:2015:i:1:p:13-34

DOI: 10.1177/2321022215577547

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