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The new regionalism: trade liberalization or insurance?

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Listed author(s):
  • Carlo Perroni
  • John Whalley

Abstract

Several of the recently negotiated regional trade agreements contain significantly fewer concessions by the large countries to smaller countries than vice versa. In this paper, we compute post-retaliation Nash tariffs by region under various regional trade arrangements using a calibrated numerical general equilibrium model of world trade. Regional agreements constrain strategic behaviour within each trading area, and (in the Customs Union case) enhance it outside the bloc. Results confirm the intuition that without side payments large-small country regional agreements (such as the Canada-U.S. agreement) would not have occurred.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 33 (2000)
Issue (Month): 1 (February)
Pages: 1-24

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Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:1-24
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  1. Bagwell, Kyle & Staiger, Robert W, 1997. "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 291-319, May.
  2. Kyle Bagwell & Robert W. Staiger, 1993. "Multilateral Tarriff Cooperation During the Formation of Regional Free Trade Areas," NBER Working Papers 4364, National Bureau of Economic Research, Inc.
  3. Adams, F Gerard & Junz, Helen B, 1971. "The Effect of the Business Cycle on Trade Flows of Industrial Countries," Journal of Finance, American Finance Association, vol. 26(2), pages 251-268, May.
  4. Thursby, Jerry G & Thursby, Marie C, 1984. "How Reliable Are Simple, Single Equation Specifications of Import Demand?," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 120-128, February.
  5. L. Alan. Winters, 1992. "Goals and Own Goals in European Trade Policy," The World Economy, Wiley Blackwell, vol. 15(5), pages 557-574, 09.
  6. John Kennan & Raymond Riezman, 2013. "Optimal Tariff Equilibria with Customs Unions," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 5, pages 53-66 World Scientific Publishing Co. Pte. Ltd..
  7. André Sapir, 1993. "Regionalism and the New Theory of International Trade: Do the Bells Toll for the GATT? A European Outlook," The World Economy, Wiley Blackwell, vol. 16(4), pages 423-438, 07.
  8. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-386, April.
  9. Trien T. Nguyen & Carlo Perroni & Randall M. Wigle, 1991. "The Value of a Uruguay Round Success," The World Economy, Wiley Blackwell, vol. 14(4), pages 359-374, December.
  10. Konstantine Gatsios & Larry Karp, 1991. "Delegation Games in Customs Unions," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 391-397.
  11. John Whalley, 1984. "Trade Liberalization among Major World Trading Areas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262231204, July.
  12. Warner, Dennis & Kreinin, Mordechai E, 1983. "Determinants of International Trade Flows," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 96-104, February.
  13. Hamilton, Bob & Whalley, John, 1983. "Optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements," Journal of International Economics, Elsevier, vol. 15(3-4), pages 323-348, November.
  14. Alan Bollard & David Mayes, 1992. "Regionalism and the Pacific Rim," Journal of Common Market Studies, Wiley Blackwell, vol. 30(2), pages 195-210, 06.
  15. Jon D. Haveman, 1996. "Some Welfare Effects of Sequential Customs Union Formation," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 941-958, November.
  16. Clinton R. Shiells & Kenneth A. Reinert, 1993. "Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 299-316, May.
  17. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-125, May.
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