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Will a Regional Bloc Enlarge?

  • Giorgia Albertin

This paper investigates whether a regional bloc would enlarge or remain stagnant in size using a model where enlargement is the endogenous outcome of the interaction between the supply of and demand for membership. We show that a maximum size of the bloc exists beyond which the regional policy-maker will be unwilling to enlarge further, and that either the supply side or the demand side of membership might be binding in the determination of the equilibrium size of the bloc. Furthermore, we analyze how the deepening of integration within a regional bloc affects its width. We show that deeper integration may lead to wider integration when the demand side of membership is binding in the determination of the equilibrium size of the bloc, while the equilibrium size of the bloc will be unaffected when the supply side of membership is binding.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/69.

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Length: 33
Date of creation: 01 Mar 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/69
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  1. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  2. Devashish Mitra & Dimitrios D. Thomakos & Mehmet A. Ulubaşoglu, 2002. ""Protection For Sale" In A Developing Country: Democracy Vs. Dictatorship," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 497-508, August.
  3. Alberto Alesina & Ignazio Angeloni & Federico Etro, 2005. "International Unions," American Economic Review, American Economic Association, vol. 95(3), pages 602-615, June.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  5. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
  6. Bond, Eric W. & Syropoulos, Constantinos, 1996. "The size of trading blocs Market power and world welfare effects," Journal of International Economics, Elsevier, vol. 40(3-4), pages 411-437, May.
  7. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
  8. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  9. Theo Eicher & Thomas Osang, 2002. "Protection for Sale: An Empirical Investigation: Comment," American Economic Review, American Economic Association, vol. 92(5), pages 1702-1710, December.
  10. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, June.
  11. Desruelle, Dominique & Richardson, Martin, 1997. "Fortress Europe: Jericho or Chateau d'If?," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 32-46, February.
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