Trade Bloc Formation Under Imperfect Competition

Paola Conconi

No 269342, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We examine the endogenous formation of trade blocs when markets are characterized by imperfect competition and governments use import tari¤s and export subsidies to alter the strategic interaction between oligopolistic …rms. Using a simple model of intra-industry trade between three ex-ante symmetric countries, we …nd that, while ‘pure’ customs unions—entailing tari¤ cooperation only—are stepping stones towards global free trade, ‘impure’ customs unions— involving the coordinated use of both tari¤s and subsidies—are stumbling blocs against it. Our analysis suggests that an international ban on export subsidies could help to sustain global free trade

Keywords: Agricultural and Food Policy; International Relations/Trade (search for similar items in EconPapers)
Pages: 34
Date: 2000-09-09
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Citations: View citations in EconPapers (3)

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Working Paper: Trade Bloc Formation Under Imperfect Competition (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269342

DOI: 10.22004/ag.econ.269342

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