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On the Viability of a Multilateral Trade Agreement: A Political-Economy Approach

Author

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  • Danilo R. Trupkin

    () (Universidad de Montevideo)

Abstract

The big picture issue this paper intends to address is on the incentive aspects of a multilateral trade liberalization. The paper builds on a framework originally introduced in Grossman and Helpman's The Politics of Free-Trade Agreements (1995). The aim of that work was to explain the viability of free trade agreements (FTAs) between two countries in a political-economy framework. A simple extension to a three-country setting allows us to analyze whether FTAs are "building blocs" or "stumbling blocs". An illustration with speci c functional forms serves to nd conditions under which FTAs are, somehow, partial building blocs, i.e., a bilateral liberalization can be feasible when multilateral liberalization is not.

Suggested Citation

  • Danilo R. Trupkin, 2010. "On the Viability of a Multilateral Trade Agreement: A Political-Economy Approach," Documentos de Trabajo/Working Papers 1001, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
  • Handle: RePEc:mnt:wpaper:1001
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    File URL: http://www.um.edu.uy/docs/working_paper_um_cee_2010_01.pdf
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    References listed on IDEAS

    as
    1. Aghion, Philippe & Antras, Pol & Helpman, Elhanan, 2007. "Negotiating free trade," Journal of International Economics, Elsevier, vol. 73(1), pages 1-30, September.
    2. Kamal Saggi & Halis Murat Yildiz, 2011. "Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade," Review of International Economics, Wiley Blackwell, vol. 19(2), pages 356-373, May.
    3. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
    4. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    5. Emanuel Ornelas, 2005. "Rent Destruction and the Political Viability of Free Trade Agreements," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1475-1506.
    6. Vijay Krishna & Roberto Serrano, 1996. "Multilateral Bargaining," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 61-80.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    International Trade; Free-Trade Agreements; Multilateral Trade Agreement; Political-Economy.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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