National welfare effects of trade bloc enlargement
AbstractThis paper analyses how the enlargement of a trade bloc will affect national welfare. We establish a partial equilibrium model of a trade bloc either operating as a monopoly with a competitive fringe or facing a duopolistic game in production taxes/subsidies. Given this framework, we demonstrate how member countries' welfare effects depend on their trade flow and the market power of the trade bloc. A numerical estimation of the effects of EU enlargement on the major grain corp marktets suggests that welfare effects are negliglible. Economic reasons are therefore unlikely to be a motivating force for further enlargement.
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Bibliographic InfoPaper provided by Technische Universität München, Environmental Economics and Agricultural Policy Group in its series Discussion Papers with number 022006.
Length: 14 pages
Date of creation: 2006
Date of revision: 2008
Publication status: Published in Agricultural Economics Review (in work; title: Enlargement of the European Union: A movement towards the optimal trade bloc size?)
trade bloc; trade liberalisation; game theory; European Union;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-EEC-2007-02-17 (European Economics)
- NEP-INT-2007-02-17 (International Trade)
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