Exchanging market access at the outsiders' expense: the case of customs unions
AbstractUnder a customs union, countries can exchange preferential market access by coordinating external tariffs to shift profits from excluded countries. I show that the exporting rents resulting from this coordination can offset trade diversion losses produced by the union, even if its members are relatively small in world markets. Such gains come, however, at the expense of excluded countries. I show that small countries can use customs unions also to foster multilateral cooperation, by increasing the incentives of excluded countries to support global free trade.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 40 (2007)
Issue (Month): 1 (February)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F15 - International Economics - - Trade - - - Economic Integration
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- Rafael Lima & Humberto Moreira & Thierry Verdier, 2008. "Lobbying and Information Transmission in Customs Unions," Working Papers 09_01, Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto.
- Giovanni Facchini & Peri Silva & Gerald Willmann, 2008.
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- Facchini, Giovanni & Silva, Peri & Willmann, Gerald, 2013. "The customs union issue: Why do we observe so few of them?," Journal of International Economics, Elsevier, vol. 90(1), pages 136-147.
- Facchini, Giovanni & Silva, Peri & Willmann, Gerald, 2012. "The Customs Union issue: Why do we observe so few of them?," CEPR Discussion Papers 9135, C.E.P.R. Discussion Papers.
- Giovanni Facchini & Peri A. Silva & Gerald Willmann, 2008. "The Customs Union Issue: Why do we Observe so few of them?," CESifo Working Paper Series 2426, CESifo Group Munich.
- Elie Appelbaum & Mark Melatos, 2012.
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- Emanuel Ornelas, 2012. "Preferential Trade Agreements and the Labor Market," CEP Discussion Papers dp1117, Centre for Economic Performance, LSE.
- Ornelas, Emanuel, 2012. "Preferential trade agreements and the labour market," ILO Working Papers 469183, International Labour Organization.
- Lahiri Sajal & Peri Silva, 2013. "Potential Pareto-improving Move towards Most Favored Nation Tariffs," Development Working Papers 348, Centro Studi Luca d\'Agliano, University of Milano, revised 24 Apr 2013.
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