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Free trade agreements without delocation

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Author Info

  • Richard E. Baldwin
  • Frederic Robert-Nicoud

Abstract

Small nations fear that FTAs with larger, richer nations will erode their industrial bases. These concerns are recognized in FTA and multilateral talks: small nations may explicitly or implicitly maintain higher trade barriers. Using a model where symmetric liberalization de-industrializes small, poor nations, we characterize the path of protection-asymmetries that allow liberalization without delocation. In welfare terms, the large nation prefers this no-delocation liberalization scheme only when barriers are sufficiently high; the small nation's ranking is reversed. An anti-delocation scheme involving international income transfers is also evaluated and found infeasible.

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Bibliographic Info

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

Volume (Year): 33 (2000)
Issue (Month): 3 (August)
Pages: 766-786

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Handle: RePEc:cje:issued:v:33:y:2000:i:3:p:766-786

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Citations

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Cited by:
  1. Volker Nocke, 2003. "A Gap for Me: Entrepreneurs and Entry," PIER Working Paper Archive 05-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 29 Sep 2005.
  2. Takatsuka, Hajime & Zeng, Dao-Zhi, 2012. "Trade liberalization and welfare: Differentiated-good versus homogeneous-good markets," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 308-325.
  3. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South trade Liberalisation Stimulate North-South Trade ?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 234-253.
  4. Fr�d�ric Robert-Nicoud, 2006. "Agglomeration and Trade with Input–Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(1), pages 101-126.
  5. Susanna Thede, 2005. "Trade Policy Formation when Geography Matters for Specialisation," Working Papers 200519, School Of Economics, University College Dublin.
  6. Ralph Ossa, 2010. "A 'New Trade' Theory of GATT/WTO Negotiations," NBER Working Papers 16388, National Bureau of Economic Research, Inc.
  7. Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics.
  8. Thede, Susanna, 2007. "Trade and Agglomeration: the Strategic use of Protection Revisited," Working Papers 2007:7, Lund University, Department of Economics.
  9. Hajime Takatsuka & Dao-Zhi Zeng, 2011. "Economic Integration and Welfare: Manufacturing vs. Agricultural Markets," ERSA conference papers ersa11p1720, European Regional Science Association.
  10. Ralph Ossa, 2008. "A 'new trade' theory of GATT/WTO negotiations," LSE Research Online Documents on Economics 19564, London School of Economics and Political Science, LSE Library.
  11. Toulemonde, Eric, 2006. "Acquisition of skills, labor subsidies, and agglomeration of firms," Journal of Urban Economics, Elsevier, vol. 59(3), pages 420-439, May.
  12. Ralph Ossa, 2008. "A 'New Trade' Theory of GATT/WTO Negotiations," CEP Discussion Papers dp0877, Centre for Economic Performance, LSE.
  13. Frédéric Robert-Nicoud & Federica Sbergami, 1999. "Endogenous Regional Policy in a Model of Agglomeration," IHEID Working Papers 02-2001, Economics Section, The Graduate Institute of International Studies.
  14. Álvarez López , M.ª Elisa & Myro Sánchez, Rafael & Vega Crespo, Josefa, 2012. "Delocation in the manufacturing sectors in the EU. A regional overview," Investigaciones Regionales, Asociación Española de Ciencia Regional, issue 22, pages 5-34.
  15. Robert-Nicoud, Frederic & Sbergami, Federica, 2004. "Home-market vs. vote-market effect: Location equilibrium in a probabilistic voting model," European Economic Review, Elsevier, vol. 48(1), pages 155-179, February.
  16. Kyle Bagwell & Robert W. Staiger, 2009. "Delocation and Trade Agreements in Imperfectly Competitive Markets," NBER Working Papers 15444, National Bureau of Economic Research, Inc.
  17. MOSSAY, Pascal & TABUCHI, Takatoshi, 2012. "Preferential trade agreements harm third countries," CORE Discussion Papers 2012035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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