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Asymmetric free trade agreements

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  • Cao, Vi
  • Fu, Haifeng
  • Wang, X. Henry

Abstract

This paper studies endogenous coalition formation among two North countries and two South countries. A North country is characterized by a larger market size and a lower unit cost of production compared to a South country. We identify the conditions under which two asymmetric free trade agreements (FTAs), each formed between a North country and a South country, can emerge as equilibrium. Such equilibria, previously not documented in the literature, may have practical implications.

Suggested Citation

  • Cao, Vi & Fu, Haifeng & Wang, X. Henry, 2025. "Asymmetric free trade agreements," Economics Letters, Elsevier, vol. 250(C).
    • Handle: RePEc:eee:ecolet:v:250:y:2025:i:c:s0165176525001041
    DOI: 10.1016/j.econlet.2025.112267
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    References listed on IDEAS

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    1. Paul Missios & Halis Murat Yildiz, 2017. "Do South–South preferential trade agreements undermine the prospects for multilateral free trade?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(1), pages 111-161, February.
    2. Satya P. Das & Subhadip Ghosh, 2006. "Endogenous trading bloc formation in a North-South global economy," Canadian Journal of Economics, Canadian Economics Association, vol. 39(3), pages 809-830, August.
    3. Satya P. Das & Subhadip Ghosh, 2006. "Endogenous trading bloc formation in a North‐South global economy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(3), pages 809-830, August.
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