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Hubs and Spokes, and Free Trade in the Americas

Author

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  • Carsten Kowalczyk
  • Ronald J. Wonnacott

Abstract

This paper compares two possible formats for free trade in the Americas: a system of spokes surrounding a U.S. hub, and a free trade area. The paper identifies the sources of welfare change, and it argues that a country's attitude towards a system depends on whether the arrangement is a complement or a substitute trading club. The paper argues also that rent-seeking activities, and costs of administration and transportation, are likely to be higher in a hub-and-spoke system than in a free trade area.

Suggested Citation

  • Carsten Kowalczyk & Ronald J. Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," NBER Working Papers 4198, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4198
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    References listed on IDEAS

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    1. Ronald J. Wonnacott, 1975. "Canada's Future in a World of Trade Blocs: A Proposal," Canadian Public Policy, University of Toronto Press, vol. 1(1), pages 118-130, Winter.
    2. Franz Gehrels, 1956. "Customs Union from a Single-Country Viewpoint," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 61-64.
    3. Jones, Ronald W, 1969. "Tariffs and Trade in General Equilibrium: Comment," American Economic Review, American Economic Association, vol. 59(3), pages 418-424, June.
    4. David Cox & Richard G. Harris, 1986. "A Quantitative Assessment of the Economic Impact on Canada of Sectoral Free Trade with the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 19(3), pages 377-394, August.
    5. Ronald J. Wonnacott, 1982. "Controlling Trade and Foreign Investment in the Canadian Economy: Some Proposals," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 567-585, November.
    6. Carsten Kowalczyk, 1990. "Welfare and Customs Unions," NBER Working Papers 3476, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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