Preferential trade agreements harm third countries
In this paper, we study market liberalization in an imperfectly competitive environment in the presence of price effects. For this purpose, we build a three-country model of international trade under monopolistic competition with endogenous prices and wages. The neighboring effect translates how the size effect propagates across countries. When some country increases in size, its relative wage increases, as well as that in a small and near country, while that in a large and distant country falls. We also show that a preferential trade agreement increases the relative wage, the welfare, and the terms-of-trade in the partner countries, where the integration effect dominates, while it lowers those in the third country.
|Date of creation:||14 Sep 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arnaud Costinot & Andres Rodriguez-Clare & Costas Arkolakis, 2010.
"New Trade Models, Same Old Gains?,"
2010 Meeting Papers
433, Society for Economic Dynamics.
- Richard E. Baldwin & Frederic Robert-Nicoud, 2000. "Free trade agreements without delocation," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 766-786, August.
- Giovanni Maggi & Andres Rodriguez-Clare, 1998.
"The Value of Trade Agreements in the Presence of Political Pressures,"
Journal of Political Economy,
University of Chicago Press, vol. 106(3), pages 574-601, June.
- Maggi, G & Rodriguez-Clare, A, 1996. "The Value of Trade Agreements in the Presence of Political Pressures," Papers 180, Princeton, Woodrow Wilson School - Public and International Affairs.
- Davis, Donald R, 1998.
"The Home Market, Trade, and Industrial Structure,"
American Economic Review,
American Economic Association, vol. 88(5), pages 1264-76, December.
- Donald R. Davis, 1997. "The Home Market, Trade, and Industrial Structure," NBER Working Papers 6076, National Bureau of Economic Research, Inc.
- Donald R. Davis, 1997. "The Home Market, Trade and Industrial Structure," Harvard Institute of Economic Research Working Papers 1800, Harvard - Institute of Economic Research.
- Davis, D.R., 1997. "The Home Market, Trade, and Industrial Structure," Papers 597, Harvard - Institute for International Development.
- Donald R. Davis, 1997. "The home market, trade, and industrial structure," Staff Reports 35, Federal Reserve Bank of New York.
- Diego Puga & Anthony J. Venables, 1995.
"Preferential Trading Arrangements and Industrial Location,"
CEP Discussion Papers
dp0267, Centre for Economic Performance, LSE.
- Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
- Puga, Diego & Venables, Anthony J, 1995. "Preferential Trading Arrangements and Industrial Location," CEPR Discussion Papers 1309, C.E.P.R. Discussion Papers.
- Diego Puga & Tony Venables, 1995. "Preferential trading arrangements and industrial location," LSE Research Online Documents on Economics 2151, London School of Economics and Political Science, LSE Library.
- DEHEZ, Pierre & FEREY, Samuel, 2012.
"How to share joint liability: a cooperative game approach,"
CORE Discussion Papers
2012023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Dehez, Pierre & Ferey, Samuel, 2013. "How to share joint liability: A cooperative game approach," Mathematical Social Sciences, Elsevier, vol. 66(1), pages 44-50.
- Behrens, Kristian & Lamorgese, Andrea R. & Ottaviano, Gianmarco I.P. & Tabuchi, Takatoshi, 2007.
"Changes in transport and non-transport costs: Local vs global impacts in a spatial network,"
Regional Science and Urban Economics,
Elsevier, vol. 37(6), pages 625-648, November.
- Kristian Behrens & Andrea R. Lamorgese & Gianmarco I.P. Ottaviano & Takatoshi Tabuchi, 2007. "Changes in transport and non transport costs: local vs. global impacts in a spatial network," Temi di discussione (Economic working papers) 628, Bank of Italy, Economic Research and International Relations Area.
- Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, March.
- Kyle Bagwell & Robert W. Staiger, 2009. "Delocation and Trade Agreements in Imperfectly Competitive Markets," NBER Working Papers 15444, National Bureau of Economic Research, Inc.
- repec:cup:cbooks:9780521715348 is not listed on IDEAS
- repec:cup:cbooks:9780521887427 is not listed on IDEAS
- repec:cup:cbooks:9781107013940 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2012035. 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: (Alain GILLIS)
If references are entirely missing, you can add them using this form.