‘Natural’ Trading Blocs: A Closer Look
It is occasionally argued that the formation of trading blocs between geographi - cally proximate countries should be encouraged because positive welfare effects are more likely to outweigh negative welfare effects. This paper presents a simple d i ff e rentiated products model that allows to test whether the formation of a ‘natural’ trading bloc, first, is indeed increasing world welfare and, second, is welfare-superior to the formation of an ‘unnatural’ trading bloc. Simulations show that, while the removal of trade barriers always improves world welfare, ‘unnatural’ bloc formation may, under some conditions, be welfare-superior to the formation of trading blocs along ‘natural’ lines. The concept of ‘natural’ trad - ing blocs is therefore a misguided prescription.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:ris:integr:0058. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jong-Eun Lee)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.