Journal article
A strategic and welfare theoretic analysis of free trade areas
Journal of international economics, v 64(1)
01 Oct 2004
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
We construct a three-country model to determine how the formation of free trade areas (FTAs) affects optimal tariffs and welfare. We find that, at constant rest of the world (ROW) tariffs, the adoption of internal free trade induces union members to reduce their external tariffs below the Kemp–Wan [J. Int. Econom. 6 (1976) 95–97] level, and causes ROW's terms of trade to improve and its welfare to rise. When ROW also behaves optimally, its policy response to the formation of the FTA is to raise tariffs. Generally, FTA members prefer to liberalize internal trade partially and find regional integration appealing only if their collective size is sufficiently large. We also demonstrate how FTAs may undermine the attainment of global free trade.
Metrics
Details
- Title
- A strategic and welfare theoretic analysis of free trade areas
- Creators
- Eric W. Bond - Pennsylvania State UniversityRaymond G. Riezman - University of IowaConstantinos Syropoulos - Florida International University
- Publication Details
- Journal of international economics, v 64(1)
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:000223931100001
- Scopus ID
- 2-s2.0-12144273930
- Other Identifier
- 991021807005004721
UN Sustainable Development Goals (SDGs)
This publication has contributed to the advancement of the following goals:
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Economics