On the Interpretation of the Kemp/Wan Theorem
This note considers the well-known theorem of M. Kemp and H. Wan concerning the welfare gains from the formation of customs unions. The author argues that the theorem may not imply that a union can unilaterally guarantee a welfare gain if nonmembers set tariffs optimally against the union. He provides an example in which a customs union cannot improve the joint welfare of members. Copyright 1995 by Royal Economic Society.
Volume (Year): 47 (1995)
Issue (Month): 4 (October)
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