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An oligopolistic theory of regional trade agreements
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Soegaard, Chrisitian (2013) An oligopolistic theory of regional trade agreements. Working Paper. Coventry, UK: University of Warwick, Department of Economics. Warwick economics research papers series (TWERPS), Volume 2013 (Number 1007).
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Text (Working paper)
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Why are trade agreements regional? I address this question in a model of oligopoly featuring
product variety. Tarifs have the effect of manipulating a country's terms of trade and shifting profits
towards the domestic market at the expense of foreign trade partners. Countries endogenously form
into regional trade agreements or global free trade in a framework where any agreement must be
sustained by repeated interaction. A crucial parameter determining the degree of regionalism is
product variety. I demonstrate that for a given trade cost and discount factor, increases in product
variety leads to greater scope for global free trade relative to regional trade agreements.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Economics -- Mathematical models , Commercial treaties, Commercial policy | ||||
Series Name: | Warwick economics research papers series (TWERPS) | ||||
Publisher: | University of Warwick, Department of Economics | ||||
Place of Publication: | Coventry, UK | ||||
Official Date: | 30 March 2013 | ||||
Dates: |
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Volume: | Volume 2013 | ||||
Number: | Number 1007 | ||||
Number of Pages: | 45 | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) |
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