Can a Preferential Trade Agreement Benefit Neighbor Countries without Compensating Them?

Masahiro Endoh, Koichi Hamada and Koji Shimomura

No 6334, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: PTAs are generally negotiated without any tariff concessions or transfers to non-member countries. Can such a PTA benefit the neighbors’ welfare? In a two-good competitive equilibrium model in the absence of an entrepot, a PTA without concessions to the outsider will hurt the outsider’s welfare when goods are normal. If one of the member countries is an entrepot, however, it definitely improves the neighbors’ welfare. In a multiple-good model, a PTA without concessions deteriorates the neighbors’ welfare, provided that all the goods are normal and substitutes, and that initial tariff levels are small.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 30
Date: 2008
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https://ageconsearch.umn.edu/record/6334/files/dp080961.pdf (application/pdf)

Related works:
Working Paper: Can a Preferential Trade Agreement Benefit Neighbor Countries without Compensating Them? (2008)
Working Paper: Can a Preferential Trade Agreement Benefit Neighbor Countries without Compensating Them? (2008)
Working Paper: Can a Preferential Trade Agreement Benefit Neighbor Countries without Compensating Them? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:6334

DOI: 10.22004/ag.econ.6334

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