Conconi, Paola (2000) Trade bloc formation under imperfect competition. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

We examine the endogenous formation of trade blocs when markets are characterized by imperfect competition and governments use import tariffs and export subsidies to alter the strategic interactions between oligopolistic firms. Using a simple model of intra-industry trade between three ex-ante symmetric countries, we find that, while 'pure' customs unions - entailing tariff cooperation only - are stepping stones towards global free trade, 'impure' customs unions - involving the coordinated use of both tariffs and subsidies - are stumbling blocs against it. Our analysis suggests that an international ban on export subsidies could held to sustain global free trade.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HF Commerce
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Trade blocs, International trade, Competition, Imperfect, Monopolies
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	September 2000
Number:	No.571
Number of Pages:	34
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Economic and Social Research Council (Great Britain) (ESRC), University of Warwick
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URI:	http://wrap.warwick.ac.uk/id/eprint/1607

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