Third-Country Effects on the Formation of Free Trade Agreements

Maggie Chen and Sumit Joshi ()
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Sumit Joshi: Department of Economics, George Washington University

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: The recent proliferation of free trade agreements (FTAs) has resulted in an in- creasingly complex network of preferential trading relationships. The economics literature has generally examined the formation of FTAs as a function of the par- ticipating countries' economic characteristics alone. In this paper, we show both theoretically and empirically that the decision to enter into an FTA is also crucially dependent on the participating countries' existing FTA relationships with third countries. Accounting for the interdependence of FTAs helps to explain a significant fraction of FTA formations that would not otherwise be predicted by countries' economic characteristics.

Keywords: free trade agreements; third-country eect; loss sharing; concession erosion (search for similar items in EconPapers)
JEL-codes: F15 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008
New Economics Papers: this item is included in nep-int and nep-net
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Citations: View citations in EconPapers (11)

Forthcoming in Journal of International Economics

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http://www.gwu.edu/~iiep/assets/docs/papers/Chen_IIEPWP2008-16.pdf (application/pdf)

Related works:
Journal Article: Third-country effects on the formation of free trade agreements (2010)
Working Paper: Third-Country Effects on the Formation of Free Trade Agreements (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2008-16

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