IDEAS home Printed from https://ideas.repec.org/a/bla/reviec/v8y2000i2p336-47.html
   My bibliography  Save this article

Free-Trade Areas and Welfare: An Equilibrium Analysis

Author

Listed:
  • Yi, Sang-Seung

Abstract

This paper examines the welfare effects of the formation of a free-trade area. When a country is constrained to charge lower tariffs on imports from some countries, it is in its interest to reduce external tariffs as well. In a linear-quadratic model of intraindustry trade, the reduction in external tariffs induced by free-trade agreements is sufficiently large to make nonmember countries better off. Since only privately beneficial free-trade agreements are signed voluntarily, the formation of a free-trade area is a Pareto improvement. Owing to free-riding problems, however, the global free-trade area may not be a stable outcome. Copyright 2000 by Blackwell Publishing Ltd.

Suggested Citation

  • Yi, Sang-Seung, 2000. "Free-Trade Areas and Welfare: An Equilibrium Analysis," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 336-347, May.
  • Handle: RePEc:bla:reviec:v:8:y:2000:i:2:p:336-47
    as

    Download full text from publisher

    File URL: http://www.blackwell-synergy.com/servlet/useragent?func=synergy&synergyAction=showTOC&journalCode=roie&volume=8&issue=2&year=2000&part=null
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    2. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    3. repec:ilo:ilowps:469183 is not listed on IDEAS
    4. Howard J. Wall, 2002. "Has Japan been left out in the cold by regional integration?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 25-36.
    5. Ornelas, Emanuel, 2012. "Preferential Trade Agreements and the Labor Market," CEPR Discussion Papers 8805, C.E.P.R. Discussion Papers.
    6. Ines Macho-Stadler & Licun Xue, 2007. "Winners and Losers from the Gradual Formation of Trading Blocs," Economica, London School of Economics and Political Science, vol. 74(296), pages 664-681, November.
    7. Daniel E. May, 2008. "Is Bilateralism Consistent with Global Free Trade?," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 7(2), pages 137-152, August.
    8. Taiji Furusawa & Hideo Konishi, 2005. "Free Trade Networks With Transfers," The Japanese Economic Review, Japanese Economic Association, vol. 56(2), pages 144-164.
    9. Hiroyuki Taguchi, 2015. "Trade creation and diversion effects of ASEAN-plus-one free trade agreements," Economics Bulletin, AccessEcon, vol. 35(3), pages 1856-1866.
    10. Chang, Yang-Ming & Xiao, Renfeng, 2015. "Preferential trade agreements between asymmetric countries: Free trade areas (with rules of origin) vs. customs unions," Japan and the World Economy, Elsevier, vol. 33(C), pages 28-43.
    11. MACHO-STADLER, Inés & XUE, Licun, 2005. "Does Free Trade Benefit All?," Cahiers de recherche 13-2005, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    12. Mario Larch & Wolfgang Lechthaler, 2013. "Whom to send to Doha? The Short-sighted Ones!," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(4), pages 634-649, October.
    13. Taguchi, Hiroyuki & Nishi, Emiko, Darcy, 2017. "Trade effects of ASEAN-plus-China and -Japan free trade agreements by production stage and industry," MPRA Paper 81628, University Library of Munich, Germany.
    14. Mukunoki, Hiroshi, 2004. "On the optimal external tariff of a free trade area with internal market integration," Japan and the World Economy, Elsevier, vol. 16(4), pages 431-448, December.
    15. Yasunori Okumura, 2015. "Free Trade Networks on Non-tariff Barriers," Journal of Industry, Competition and Trade, Springer, vol. 15(3), pages 223-238, September.
    16. Kawabata, Yasushi, 2015. "Endogenous formation of free trade agreements in vertically related markets," Research in Economics, Elsevier, vol. 69(2), pages 214-223.
    17. Gabriel Felbermayr & Mario Larch & Finn Krüger & Lisandra Flach & Erdal Yalcin & Sebastian Benz, 2013. "Dimensionen und Auswirkungen eines Freihandelsabkommens zwischen der EU und den USA," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62, October.
    18. Ornelas, Emanuel, 2005. "Trade creating free trade areas and the undermining of multilateralism," European Economic Review, Elsevier, vol. 49(7), pages 1717-1735, October.
    19. Noritsugu Nakanishi, 2011. "Farsightedly Stable FTA Structures," Discussion Papers 1114, Graduate School of Economics, Kobe University.
    20. Akihiko Yanase & Hiroshi Kurata, 2014. "Domestic Product Standards and Free Trade Areas: Implications for the EU-Japan FTA," ERSA conference papers ersa14p1041, European Regional Science Association.
    21. Baier, Scott L. & Bergstrand, Jeffrey H., 2004. "Economic determinants of free trade agreements," Journal of International Economics, Elsevier, vol. 64(1), pages 29-63, October.
    22. Halis Murat Yildiz, 2014. "Hub and spoke trade agreements under oligopoly with asymmetric costs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(1), pages 97-110, February.
    23. Kawabata, Yasushi & Yanase, Akihiko & Kurata, Hiroshi, 2010. "Vertical trade and free trade agreements," Journal of the Japanese and International Economies, Elsevier, vol. 24(4), pages 569-585, December.
    24. Hiroshi Daisaka & Taiji Furusawa, 2014. "Dynamic Free Trade Networks: Some Numerical Results," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 469-487, August.
    25. Fumi Kiyotaki & Toshiji Miyakawa, 2013. "Barriers to Global Free Trade through Bilateral Agreements," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 536-548, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:8:y:2000:i:2:p:336-47. 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). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.