Bilateralism, multilateralism, and the quest for global free trade
We develop an equilibrium theory of trade agreements in which both the degree and the nature (bilateral or multilateral) of trade liberalization are endogenously determined. To determine whether and how bilateralism matters, we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis. We find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus, there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements. By contrast, under symmetry, both bilateralism and multilateralism yield global free trade.
Year of publication: |
2010
|
---|---|
Authors: | Saggi, Kamal ; Yildiz, Halis Murat |
Published in: |
Journal of International Economics. - Elsevier, ISSN 0022-1996. - Vol. 81.2010, 1, p. 26-37
|
Publisher: |
Elsevier |
Keywords: | Bilateral trade agreements Multilateral trade liberalization Free trade agreements GATT |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Saggi, Kamal, (2011)
-
Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade
Saggi, Kamal, (2011)
-
External Trade Diversion, Exclusion Incentives and the Nature of Preferential Trade Agreements
Missios, Paul, (2014)
- More ...