National welfare effects of trade bloc enlargement
This paper analyses how the enlargement of a trade bloc will affect national welfare. We establish a partial equilibrium model of a trade bloc either operating as a monopoly with a competitive fringe or facing a duopolistic game in production taxes/subsidies. Given this framework, we demonstrate how member countries' welfare effects depend on their trade flow and the market power of the trade bloc. A numerical estimation of the effects of EU enlargement on the major grain corp marktets suggests that welfare effects are negliglible. Economic reasons are therefore unlikely to be a motivating force for further enlargement.
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|Date of creation:||2006|
|Date of revision:||2008|
|Publication status:||Published in Agricultural Economics Review (in work; title: Enlargement of the European Union: A movement towards the optimal trade bloc size?)|
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