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Fortress Europe: Jericho or Chateau d'If?

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  • Desruelle, Dominique
  • Richardson, Martin

Abstract

Traditional analysis of customs union formation suggests that it leads to an increase in members' external tariffs. This paper stresses two aspects of European trade and trade policy--a large volume of intra-industry trade between similar countries and a political motivation for tariffs--and highlights a role for tariff coordination in a model of differentiated products in which tariffs affect domestic costs and thus export prices and the magnitude of monopolistic rents. We show that when workers choose the tariffs and receive but a small portion of tariff revenues, the union's tariff wall falls. Copyright 1997 by Blackwell Publishing Ltd.

Suggested Citation

  • Desruelle, Dominique & Richardson, Martin, 1997. "Fortress Europe: Jericho or Chateau d'If?," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 32-46, February.
  • Handle: RePEc:bla:reviec:v:5:y:1997:i:1:p:32-46
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    Cited by:

    1. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
    2. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers.
    3. Giorgia Albertin, 2007. "Will a Regional Bloc Enlarge?," IMF Working Papers 07/69, International Monetary Fund.
    4. Giorgia Albertin, 2008. "Regionalism or Multilateralism? A Political Economy Choice," IMF Working Papers 08/65, International Monetary Fund.
    5. Rodney D. Ludema, 1998. "On the Value of Preferential Trade Agreements in Multilateral Negotiations," International Trade 9802003, EconWPA.

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