Preferential Trade and Welfare with Differentiated Products
We consider analytically and numerically the welfare tradeoffs inherent in a preferential trade area (PTA) with products differentiated by region of origin. For a small open economy in such a setting, welfare gains are associated with higher trade volumes within the PTA. However, welfare losses are induced by declining tariff revenues on trade with nonmember countries. We show that both effects are concave, while one is a non-monotonic and the other a potentially non-monotonic function of pre-PTA partner trade shares. Therefore, the relationship between initial partner import shares and direct static welfare impacts of a PTA are theoretically ambiguous. This finding contrasts with conventional results in the homogeneous-goods case, whereby the smaller is the pre-agreement trade volume with a potential partner the more beneficial is a PTA.
(This abstract was borrowed from another version of this item.)
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 20 (2012)
Issue (Month): 5 (November)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0965-7576|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Riezman, Raymond, 1979.
"A 3 x 3 model of customs unions,"
Journal of International Economics,
Elsevier, vol. 9(3), pages 341-354, August.
- Furusawa, Taiji & Konishi, Hideo, 2007.
"Free trade networks,"
Journal of International Economics,
Elsevier, vol. 72(2), pages 310-335, July.
- Chen, Maggie & Joshi, Sumit, 2010.
"Third-Country Effects on the Formation of Free Trade Agreements,"
23507, University Library of Munich, Germany.
- Chen, Maggie Xiaoyang & Joshi, Sumit, 2010. "Third-country effects on the formation of free trade agreements," Journal of International Economics, Elsevier, vol. 82(2), pages 238-248, November.
- Maggie Xiaoyang Chen & Sumit Joshi, 2010. "Third-Country Effects on the Formation of Free Trade Agreements," Working Papers 2008-16, The George Washington University, Institute for International Economic Policy.
- Eric W. Bond & Raymond G. Riezman & Constantinos Syropoulos, 2013.
"A strategic and welfare theoretic analysis of free trade areas,"
World Scientific Book Chapters,
in: International Trade Agreements and Political Economy, chapter 8, pages 101-127
World Scientific Publishing Co. Pte. Ltd..
- Bond, Eric W. & Riezman, Raymond G. & Syropoulos, Constantinos, 2004. "A strategic and welfare theoretic analysis of free trade areas," Journal of International Economics, Elsevier, vol. 64(1), pages 1-27, October.
When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:20:y:2012:i:5:p:884-892. See general 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.