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National welfare effects of trade bloc enlargement

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Author Info
Thilo W. Glebe () (Environmental Economics and Agricultural Policy Group, Technical University of Munich)
Abstract

This 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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Publisher Info
Paper provided by Technische Universität München, Environmental Economics and Agricultural Policy Group in its series Discussion Papers with number 022006.

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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?)
Handle: RePEc:tuu:papers:022006

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Related research
Keywords: trade bloc; trade liberalisation; game theory; European Union;

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  1. Rabinowicz, Ewa, 1999. "Redesigning the CAP to Meet the Challenges of EU Enlargement and the WTO: What Can Agricultural Economic Research Contribute?," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 265-81, August.
  2. Carsten Daugbjerg & Alan Swinbank, 2004. "The CAP and EU Enlargement: Prospects for an Alternative Strategy to Avoid the Lock-in of CAP Support," Journal of Common Market Studies, Blackwell Publishing, vol. 42(1), pages 99-119, 02. [Downloadable!] (restricted)
  3. Kohler, Wilhelm, 2004. "Eastern Enlargement of the EU: A Comprehensive Welfare Assessment," Discussion Paper Series 26377, Hamburg Institute of International Economics. [Downloadable!]
  4. Christian Keuschnigg & Mirela Keuschnigg & Wilhelm Kohler, 2001. "The German Perspective on Eastern EU Enlargement," The World Economy, Blackwell Publishing, vol. 24(4), pages 513-542, 04. [Downloadable!] (restricted)
  5. Bond, Eric W. & Syropoulos, Constantinos, 1996. "The size of trading blocs Market power and world welfare effects," Journal of International Economics, Elsevier, vol. 40(3-4), pages 411-437, May. [Downloadable!] (restricted)
  6. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CES, MSH, vol. 12(24), pages 125-176, 04. [Downloadable!] (restricted)
  7. Hungerford, Thomas L., 1991. "GATT: A cooperative equilibrium in a noncooperative trading regime?," Journal of International Economics, Elsevier, vol. 31(3-4), pages 357-369, November. [Downloadable!] (restricted)
  8. Syropoulos, Constantinos, 2002. "Optimum Tariffs and Retaliation Revisited: How Country Size Matters," Review of Economic Studies, Blackwell Publishing, vol. 69(3), pages 707-27, July.
  9. David Blandford & Richard N. Boisvert & Linda Fulponi, 2003. "Nontrade Concerns: Reconciling Domestic Policy Objectives with Freer Trade in Agricultural Products," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(3), pages 668-673, 08. [Downloadable!] (restricted)
  10. Nahuis, Richard, 2004. "One size fits all?: Accession to the internal market; an industry-level assessment of EU enlargement," Journal of Policy Modeling, Elsevier, vol. 26(5), pages 571-586, July. [Downloadable!] (restricted)
  11. Kennan, John & Riezman, Raymond, 1988. "Do Big Countries Win Tariff Wars?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 81-85, February. [Downloadable!] (restricted)
  12. Kohler, Wilhelm, 2004. "Eastern enlargement of the EU: a comprehensive welfare assessment," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 865-888, October. [Downloadable!] (restricted)
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