Membership in Two Customs Unions
AbstractUnder certain membership property rights obeying the 'liberal ethic' and 'approved entry' axioms, we define three-stage games where the last two stages of non-cooperative tariff setting game and subsequent Cournotian competition are preceded by the formation of customs unions or free trade areas. We refine Markov-perfection for both games. We call a Markov-perfect equilibrium of a free trade agreement game enhanced if no country would have an incentive to deviate from its declared list of free trade areas, even if each existing free trade area were willing to accept it. We also call a Markov-perfect equilibrium of a customs union game stable if no country has an 'acceptable' proposal to the others and resulting in a better outcome for itself. We show that, although uniform customs unions are disjoint, a country may be a member in two distinct customs unions (resp., free trade areas) in a stable (resp., enhanced) Markov-perfect equilibrium of a customs union (resp., free trade agreement) game.
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 Economic Research Forum in its series Working Papers with number 9627.
Date of creation: Sep 1996
Date of revision: Sep 1996
Publication status: Published by The Economic Research Forum (ERF)
You can help add them by filling out this form.
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: (Namees Nabeel).
If references are entirely missing, you can add them using this form.