Hub and spoke trade agreements under oligopoly with asymmetric costs

Halis Yildiz

MPRA Paper from University Library of Munich, Germany

Abstract: Using an oligopoly model of trade, we study the individual and world welfare implications of hub and spoke trade agreements. Under a hub and spoke regime, the hub country can benefit at the expense of the spokes relative to free trade. Furthermore, if the hub is sufficiently efficient compared to the spokes, such a regime can yield higher global welfare than free trade. Preferential treatment of the hub country in its export markets improves world welfare because it helps allocate a larger share of the world's output to a low cost location.

Keywords: oligopoly; hub and spoke trade agreements; global free trade (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2011-10-02
New Economics Papers: this item is included in nep-int
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Related works:
Working Paper: Hub and Spoke Trade Agreements under Oligopoly with Asymmetric Costs (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34964

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