Will a Regional Bloc Enlarge?

Giorgia Albertin

No 2007/069, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates whether a regional bloc would enlarge or remain stagnant in size using a model where enlargement is the endogenous outcome of the interaction between the supply of and demand for membership. We show that a maximum size of the bloc exists beyond which the regional policy-maker will be unwilling to enlarge further, and that either the supply side or the demand side of membership might be binding in the determination of the equilibrium size of the bloc. Furthermore, we analyze how the deepening of integration within a regional bloc affects its width. We show that deeper integration may lead to wider integration when the demand side of membership is binding in the determination of the equilibrium size of the bloc, while the equilibrium size of the bloc will be unaffected when the supply side of membership is binding.

Keywords: WP; trading bloc (search for similar items in EconPapers)
Pages: 33
Date: 2007-03-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2007/069

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