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Third-country effects on the formation of free trade agreements

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  • Chen, Maggie Xiaoyang
  • Joshi, Sumit

Abstract

The recent proliferation of free trade agreements (FTAs) has resulted in an increasingly complex network of preferential trading relationships. The economics literature has generally examined the formation of FTAs as a function of the participating countries' economic characteristics alone. In this paper, we show both theoretically and empirically that the decision to enter into an FTA is also crucially dependent on the participating countries' existing FTA relationships with third countries. Accounting for the interdependence of FTAs helps to explain a significant fraction of FTA formations that would not otherwise be predicted by countries' economic characteristics.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 82 (2010)
Issue (Month): 2 (November)
Pages: 238-248

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Handle: RePEc:eee:inecon:v:82:y:2010:i:2:p:238-248

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Free trade agreements Third-country effect Loss sharing Concession erosion;

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Cited by:
  1. Jeffrey H. Bergstrand & Peter Egger, 2011. "What Determines BITs?," CESifo Working Paper Series 3514, CESifo Group Munich.
  2. Katerina Gradeva & Dany Jaimovich, 2014. "Multilateral determinants of regionalism revisited," The Review of International Organizations, Springer, vol. 9(2), pages 163-203, June.
  3. Chen, Maggie Xiaoyang & Joshi, Sumit, 2010. "Third-country effects on the formation of free trade agreements," Journal of International Economics, Elsevier, vol. 82(2), pages 238-248, November.
  4. Gianluca Orefice, 2013. "International Migration and Trade Agreements: the new role of PTAs," FIW Working Paper series 111, FIW.
  5. Denise Eby Konan & Keith E. Maskus, 2012. "Preferential Trade and Welfare with Differentiated Products," Review of International Economics, Wiley Blackwell, vol. 20(5), pages 884-892, November.
  6. Angela Abbate & Luca De Benedictis & Giorgio Fagiolo & Lucia Tajoli, 2012. "The International Trade Network in Space and Time," LEM Papers Series 2012/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  7. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2014. "Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion," Discussion Papers Series 500, School of Economics, University of Queensland, Australia.

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