Strategic trade policy and the threat of regionalism
Conconi, Paola (2001) Strategic trade policy and the threat of regionalism. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) (No.73/).
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We examine the formation of trade agreements when markets are characterized by imperfect competition and governments can alter the strategic interaction between oligopolistic firms through the use of import tariffs and export subsidies. Using a simple three-country model of intra-industry trade, we show that whether preferential trade agreements are stepping stones or stumbling blocs towards the attainment of multilateral cooperation depends on the degree of product di¤erentiation and industry concentration. However, when import tariffs are the only available policy instrument, global free trade is always sustainable. Our analysis provides a rationale for the recent attempts to strengthen international rules against the use of export subsidies. It also suggests that focusing on one dimension of strategic interaction only might result in drawing incorrect conclusions about the outcome of the trade negotiations.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HF Commerce
J Political Science > JZ International relations
|Divisions:||Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation|
|Library of Congress Subject Headings (LCSH):||Competition, Imperfect, Commercial policy, Regionalism (International organization), Tariff, Export duties|
|Series Name:||Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)|
|Publisher:||University of Warwick. Centre for the Study of Globalisation and Regionalisation|
|Place of Publication:||Coventry|
|Official Date:||June 2001|
|Number of Pages:||31|
|Status:||Not Peer Reviewed|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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