Bilateralism and free trade
AbstractIn recent years, there has been a great deal of research on the relative merits of multilateralism and bilateralism and their implications for the nature of the trading regime between countries. In this paper we explore the scope of bilateral free-trade agreements as a foundation for free trade, using recent developments in the theory of strategic network formation. We study a setting with many contries; in each country there are firms, which can sell in the domestic market as well as sell in the foreign markets. The possibility of selling in foreign markets depends on the nature of import tariffs faced by firms. Countries can sign bilateral free-trade agreements which lower import tariffs and thereby facilitate trade. We allow a country to sign any number of bilateral trade agreements. A profile of trade agreements defines the trading regime. We study the nature of trading regimes that are consistent with the incentives of individual countries. Our principal finding is that bilateralism is consistent with global free trade.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute in its series Econometric Institute Research Papers with number EI 9953-/A.
Date of creation: 22 Dec 1999
Date of revision:
bilateralism; free trade; strategic network formation;
Other versions of this item:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (RePub).
If references are entirely missing, you can add them using this form.