On 'CU can dominate UTR'
For a decade and a half, Cooper and Massell's (1965) conclusion that a policy of unilateral tariff reduction (UTR) is superior to the formation of a customs union (CU) remained unchallenged. However Wonnacott and Wonnacott (1981) using a more realistic model, claimed to show that UTR need not dominate a CU. Here, we point out that the Wonnacott and Wonnacott model is incomplete since their CU does not have a common external tariff, and demonstrate that the incorporation of such a tariff in their analysis restores the validity of the Cooper and Massell proposition.
Volume (Year): 7 (2000)
Issue (Month): 5 ()
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