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The Theory of Trade Agreements, Economic Integration, Size of Economies, Trade Costs and Welfare

Snorri Thomas Snorrason
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Snorri Thomas Snorrason: Lancaster University

Chapter Chapter 2 in Asymmetric Economic Integration, 2012, pp 9-46 from Springer

Abstract: Abstract The primary objective of this book is to investigate the welfare effects of asymmetric economic integration on economies. This chapter is intended to provide a review of the relevant theoretical, technical and empirical literature relating to several distinct research areas which, in the context of the book, are inter-linked. The first section provides a descriptive overview of preferential trade areas (PTAs) as the general category that includes all forms of economic integration. This discussion includes a brief outline of the GATT/WTO rules permitting the formation of trade blocs as well as brief definitions and discussions of different types of PTAs. Sections 2.2 and 2.3 present an overview of the theory of economic integration. This includes a discussion of the second best and transfer payments as well as the relationship between economic integration, trade flows and economic welfare. The discussion in is concerned with the examination of trade costs and, in particular, their implications for economic integration and welfare. This is followed by an overview of the literature on the size implications for economies, specifically the key size characteristics of economies. The discussion then addresses the implications of trade costs for economies and also the welfare effects of their membership of regional economic blocs. provides a brief summary and conclusions.

Keywords: Free Trade; World Trade Organization; Trade Cost; Economic Integration; Small Country (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/978-3-7908-2861-0_2

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