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Trade bloc formation under imperfect competition

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Conconi, Paola (2000) Trade bloc formation under imperfect competition. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.571).

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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

Official Date:

September 2000

Dates:

Date	Event
September 2000	Published

Number:

No.571

Number of Pages:

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Not Peer Reviewed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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