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Enlargement of the European Union: A movement towards the optimal trade bloc size?

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  • Glebe, Thilo W.
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    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 crop markets suggests that welfare effects are negligible. Economic reasons are therefore unlikely to be a motivating force for further enlargement.

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    File URL: http://purl.umn.edu/58061
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    Article provided by Greek Association of Agricultural Economists in its journal Agricultural Economics Review.

    Volume (Year): 10 (2009)
    Issue (Month): 2 (June)
    Pages:

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    Handle: RePEc:ags:aergaa:58061
    Contact details of provider: Web page: http://www.etagro.gr/
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    More information through EDIRC

    Keywords: trade bloc; trade liberalisation; game theory; European Union; International Relations/Trade; D42; F11; Q17; Q18;

    Find related papers by JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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    1. Sumner, Daniel A., 2000. "Domestic support and the WTO negotiations," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(3), September.
    2. Christian Keuschnigg & Mirela Keuschnigg & Wilhelm Kohler, 2001. "The German Perspective on Eastern EU Enlargement," The World Economy, Wiley Blackwell, vol. 24(4), pages 513-542, 04.
    3. Ricahrd 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.
    4. 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.
    5. 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, Agricultural and Applied Economics Association, vol. 85(3), pages 668-673.
    6. Kohler, Wilhelm K., 2004. "Eastern Enlargement of the EU : A Comprehensive Welfare Assessment," HWWA Discussion Papers 260, Hamburg Institute of International Economics (HWWA).
    7. Constantinos Syropoulos, 2002. "Optimum Tariffs and Retaliation Revisited: How Country Size Matters," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 707-727.
    8. John Kennan & Raymond Riezman, 2013. "Do Big Countries Win Tariff Wars?," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 4, pages 45-51 World Scientific Publishing Co. Pte. Ltd..
    9. Kohler, Wilhelm, 2004. "Eastern enlargement of the EU: a comprehensive welfare assessment," Journal of Policy Modeling, Elsevier, vol. 26(7), pages 865-888, October.
    10. 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, Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 265-281, August.
    11. 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, Wiley Blackwell, vol. 42(1), pages 99-119, 02.
    12. S. E. Frandsen & H. G. Jensen & D. M. Vanzetti, 2000. "Expanding 'Fortress Europe': Agricultural Trade and Welfare Implications of European Enlargement for Non-member Regions," The World Economy, Wiley Blackwell, vol. 23(3), pages 309-329, 03.
    13. Philip C. Abbott & Panu K. S. Kallio, 1996. "Implications of Game Theory for International Agricultural Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 738-744.
    14. 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.
    15. 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.
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