Resource title

Can a preferential trade agreement benefit neighbor countries without compensating them?

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image for OpenScout resource :: Can a preferential trade agreement benefit neighbor countries without compensating them?

Resource description

PTAs are generally negotiated without any tariff concessions or transfers to non-member countries. Can such a PTA benefit the neighbors' welfare? In a two-good competitive equilibrium model in the absence of an entrepôt, a PTA without concessions to the outside will hurt the outsider's welfare when goods are normal. If one of the member countries is an entrepôt, however, it definitely improves the neighbors' welfare. In a multiple-good model, a PTA without concessions deteriorates the neighbors' welfare, provided that all the goods are normal and substitutes, and that initial tariff levels are small.

Resource author

Masahiro Endoh, Koichi Hamada, Koji Shimomura

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27000

Resource license

Adapt according to the presented license agreement and reference the original author.