A Deep Case for Shallow Integration

John Sturm Becko and Arnaud Costinot

No 35685, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study international cooperation in a general environment with pecuniary and non-pecuniary externalities across countries. We derive two main theorems, each demonstrating that market-access commitments, a form of shallow integration, are sufficient to implement globally efficient policies. When all cross-border externalities are pecuniary, the first theorem provides a new and unifying perspective on a series of results by Bagwell and Staiger. When some cross-border externalities are non-pecuniary, the second theorem shows that market-access commitments, properly extended, still sustain global efficiency. These extended market-access commitments reinterpret cross-border externalities as additional goods that are traded and priced at their social values. We discuss the implications for international cooperation on climate change and geopolitics.

JEL-codes: F10 F11 F12 F13 F15 (search for similar items in EconPapers)
Date: 2026-08
Note: ITI
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Working Paper: A Deep Case for Shallow Integration (2026)
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