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Economic Effects of Forming Free Trade Agreement Between Technologically Asymmetric Countries and Optimal Government Policies

Author

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  • Young-Han Kim

    (Sungkyunkwan University)

Abstract

This paper examines the welfare effects of forming FTA between asymmetric countries in terms of technologies, and the influence of the technology asymmetry on the dynamic policy coordination for FTA. In addition, we determine the optimal policies with respect to FTA formation under incomplete information about the technology differences. We demonstrate that welfare gains for the FTA partner country with a higher technology is dominant to the welfare change to the home country with a lower technology, reducing the disagreement payoff of the partner country. In addition, with a higher technology asymmetry, efficient FTA policy coordination is less likely.

Suggested Citation

  • Young-Han Kim, 2002. "Economic Effects of Forming Free Trade Agreement Between Technologically Asymmetric Countries and Optimal Government Policies," Korean Economic Review, Korean Economic Association, vol. 18, pages 111-128.
    • Handle: RePEc:kea:keappr:ker-200206-18-1-06
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    More about this item

    Keywords

    FTA; technology assymetry; polocy coordination;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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