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Political economy of preferencial trade agreement

Author

Listed:
  • Daniel Augusto Motta

Abstract

The purpose of this paper is to analyse the political economy of preferential trade agreements based on a sequential non-cooperative Stackelberg political game between a large economy and a small one, in which the political dispute of rival lobby groups defines the unilateral stance of both governments in the first stage and the Stackelberg “coalition-proof” equilibrium defines t the free trade agreement format in the second stage. Finally, a few modifications in the initial game structure are discussed in order to enhance the small economy’s negotiation power. The political economy model is applied to FTAA case. JEL Classification: F02, F13, F15.

Suggested Citation

  • Daniel Augusto Motta, 2007. "Political economy of preferencial trade agreement," Brazilian Journal of Political Economy, Center of Political Economy, vol. 27(2), pages 193-208.
    • Handle: RePEc:ekm:repojs:v:27:y:2007:i:2:p:193-208:id:561
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    More about this item

    Keywords

    FTAA; political economy; bargaining; non-cooperative games;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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