EconPapers    
Economics at your fingertips  
 

Bilateral versus Multilateral Free Trade Agreements: A Welfare Analysis

Demet Yilmazkuday and Hakan Yilmazkuday

No 1401, Working Papers from Florida International University, Department of Economics

Abstract: Why do we observe proliferation of bilateral free trade agreements (FTAs) between certain types of countries instead of having progress in attaining global free trade through a multilateral FTA? We answer this question by exploring the enforceability of di¡èerent types of FTAs through comparing minimum discount factors that are necessary to sustain them in an in?nitely repeated game framework. We also search for the globally welfare maximizing trade agreements that are sustainable under different conditions. The results depict that transportation costs, differences in country sizes and comparative advantages are all obstacles for having a multilateral FTA. Accordingly, international development policies conducted for the removal of such obstacles should be the main goal toward achieving a multilateral FTA, which we show to be the ?rst-best solution to the maximization problem of global welfare.

Keywords: Free Trade Agreements; Self-Enforcing Rules; Transportation Costs; Country Size; Comparative Advantage; Repeated Game (search for similar items in EconPapers)
JEL-codes: C72 C73 D60 F15 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2014-01
New Economics Papers: this item is included in nep-gth and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://economics.fiu.edu/research/pdfs/2014_working_papers/1401.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: Bilateral versus Multilateral Free Trade Agreements: A Welfare Analysis (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:1401

Access Statistics for this paper

More papers in Working Papers from Florida International University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sheng Guo ().

 
Page updated 2025-02-09
Handle: RePEc:fiu:wpaper:1401