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The new regionalism: trade liberalization or insurance?

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  • 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.

Suggested Citation

  • Carlo Perroni & John Whalley, 2000. "The new regionalism: trade liberalization or insurance?," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 1-24, February.
    • Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:1-24
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