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Size of regional trade agreements and regional trade bias

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  • Michele Fratianni
  • Chang Hoon Oh

Abstract

We test the relationship between size of regional trade agreement (RTA) and regional trade bias using a gravity equation on a large sample of 143 countries for the period 1980-2003. We find that regional trade bias declines with the size of the club and that three of the four expanding RTAs have already surpassed their 'optimal' sizes. There is no evidence that RTAs have set protection levels against outsiders noncooperatively.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics Letters.

Volume (Year): 16 (2009)
Issue (Month): 16 ()
Pages: 1603-1606

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Handle: RePEc:taf:apeclt:v:16:y:2009:i:16:p:1603-1606

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  1. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  2. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
  3. de Melo, Jaime & Montenegro, Claudio & Panagariya, Arvind, 1992. "Regional integration, old and new," Policy Research Working Paper Series 985, The World Bank.
  4. Fratianni, Michele & Kang, Heejoon, 2006. "Heterogeneous distance-elasticities in trade gravity models," Economics Letters, Elsevier, vol. 90(1), pages 68-71, January.
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