Trade bloc formation under imperfect competition
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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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|
|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|Status:||Not Peer Reviewed|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|
Bagwell, K., and R. W. Staiger (1994). “Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case”, NBER Working Paper No. 5574.
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