On the Viability of a Multilateral Trade Agreement: A Political-Economy Approach

Danilo Trupkin

No 1001, Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo.

Abstract: The big picture issue this paper intends to address is on the incentive aspects of a multilateral trade liberalization. The paper builds on a framework originally introduced in Grossman and Helpman's The Politics of Free-Trade Agreements (1995). The aim of that work was to explain the viability of free trade agreements (FTAs) between two countries in a political-economy framework. A simple extension to a three-country setting allows us to analyze whether FTAs are "building blocs" or "stumbling blocs". An illustration with specific functional forms serves to and conditions under which FTAs are, somehow, partial building blocs, i.e., a bilateral liberalization can be feasible when multilateral liberalization is not.

Keywords: International Trade; Free-Trade Agreements; Multilateral Trade Agreement; Political-Economy. (search for similar items in EconPapers)
JEL-codes: D78 F13 F15 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:mnt:wpaper:1001

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