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Delegation Games in Customs Unions

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Author Info
Gatsios, Konstantine
Karp, Larry

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Abstract

We study a model in which a customs union trades with countries that behaved strategically. If the members of the customs union are similar but not identical, one country will want to delegate authority for making union policy to its partner. Even if side-payments within the union are permitted, union welfare may be higher if one country chooses union policy to maximize its own welfare, rather than having a supra-national agent choosing union policy to maximize joint welfare. The delegation decision depends on whether the policies used by union and non-union countries are strategic substitutes or complements and on which union member is more "aggressive".

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 337.

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Date of creation: Oct 1989
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Handle: RePEc:cpr:ceprdp:337

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Related research
Keywords: Customs Union; Trade Policy;

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  1. Giovanni Facchini & Peri A. Silva & Gerald Willmann, 2008. "The Customs Union Issue: Why do we Observe so few of them?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Winters, L. Alan, 1996. "Regionalism versus multilateralism," Policy Research Working Paper Series 1687, The World Bank. [Downloadable!]
  3. Levent Koçkesen, 2007. "Unobservable Contracts as Precommitments," Economic Theory, Springer, vol. 31(3), pages 539-552, June. [Downloadable!] (restricted)
  4. Carlo Perroni & John Whalley, 1994. "The New Regionalism: Trade Liberalization or Insurance?," NBER Working Papers 4626, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Constantinos Syropoulos, 2002. "On Tariff Preferences And Delegation Decisions In Customs Unions: A Heckscher--Ohlin Approach," Economic Journal, Royal Economic Society, vol. 112(481), pages 625-648, July. [Downloadable!] (restricted)
  6. Subhayu Bandyopadhyay & Sajal Lahiri & Howard J. Wall, 2009. "Cross-border lobbying in preferential trading agreements: implications for external tariffs," Working Papers 2009-041, Federal Reserve Bank of St. Louis. [Downloadable!]
  7. Raymond Riezman, 1997. "Can Bilateral Trade Agreements Help Induce Free Trade?," International Trade 9706001, EconWPA. [Downloadable!]
    Other versions:
  8. Redoano, Michela & Scharf, Kimberley Ann, 2002. "The Political Economy of Policy Centralization: Direct Versus Representative Democracy," CEPR Discussion Papers 3631, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. John Whalley, 1996. "Why Do Countries Seek Regional Trade Agreements?," NBER Working Papers 5552, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Andriamananjara, Soamiely & Schiff, Maurice, 1998. "Regional groupings among microstates," Policy Research Working Paper Series 1922, The World Bank. [Downloadable!]
  11. David R. Collie, 1997. "Delegation And Strategic Trade Policy," International Economic Journal, Korean International Economic Association, vol. 11(3), pages 35-46, October. [Downloadable!] (restricted)
  12. José Méndez Naya, 2002. "Subsidios a la producción y delegación de la política comercial en una unión aduanera," Estudios de Economia, University of Chile, Department of Economics, vol. 29(2 Year 20), pages 231-246, December. [Downloadable!]
  13. Levent Koçkesen & Emanuele Gerratana, 2008. "Delegation with Incomplete and Renegotiable Contracts," TÜSÄ°AD-Koç University Economic Research Forum Working Papers 0803., TUSIAD-Koc University Economic Research Forum. [Downloadable!]
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