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Some Welfare Effects of Sequential Customs Union Formation

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  • Jon D. Haveman

Abstract

This paper deals with the effects on world welfare of sequential customs union formation. A computational model of customs union formation is developed and simulated under a variety of assumptions. These assumptions concern various characteristics of the world, the pattern of customs union formation, and GATT restrictions on common external tariffs. The results show that unrestricted customs union formation is likely to result in successive deterioration of world welfare, despite gains for the member countries collectively. An examination of the current GATT guidelines, however, suggests that if they were vigorously enforced, world welfare would rise with customs union formation.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 29 (1996)
Issue (Month): 4 (November)
Pages: 941-58

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Handle: RePEc:cje:issued:v:29:y:1996:i:4:p:941-58

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Cited by:
  1. Carlo Perroni & John Whalley, 2000. "The new regionalism: trade liberalization or insurance?," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 1-24, February.
  2. M. Ayhan Kose & Raymond Riezman, 2000. "Small Countries and Preferential Trade Agreements "How Severe is the Innocent Bystander Problem?"," CESifo Working Paper Series 253, CESifo Group Munich.
  3. Hazel Parcon, 2008. "Disaggregating PTAs at the Role of International Division of Labor on PTA Formation," Working Papers 200806, University of Hawaii at Manoa, Department of Economics.
  4. Raymond Riezman, 1999. "Can Bilateral Trade Agreements Help Induce Free Trade?," CSGR Working papers series 44/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
  5. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
  6. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
  7. Caroline L. Freund, 1998. "Regionalism and permanent diversion," International Finance Discussion Papers 602, Board of Governors of the Federal Reserve System (U.S.).
  8. Antonio Spilimbergo & Ernesto Stein, 1996. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," NBER Working Papers 5472, National Bureau of Economic Research, Inc.
  9. Chris Papageorgiou & Christian Henn & Theo S. Eicher, 2008. "Trade Creation and Diversion Revisited," IMF Working Papers 08/66, International Monetary Fund.
  10. Melatos, Mark & Woodland, Alan, 2007. "Endogenous trade bloc formation in an asymmetric world," European Economic Review, Elsevier, vol. 51(4), pages 901-924, May.
  11. Madanmohan Ghosh & Carlo Perroni & John Whalley, 1999. "The Value of MFN Treatment to Developing Countries," UWO Department of Economics Working Papers 9907, University of Western Ontario, Department of Economics.
  12. Madanmohan Ghosh & Carlo Perroni & John Whalley, 1998. "The Value of MFN Treatment," NBER Working Papers 6461, National Bureau of Economic Research, Inc.

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