Saggi, Kamal; Wong, Woan Foong; Yildiz, Halis Murat - 2020
In a three-country model of endogenous trade agreements, we study the implications of the Most Favored Nation Clause … (MFN) when countries are free to form discriminatory preferential trade agreements (PTAs). While PTA members discriminate … reduces the potency of a country’s optimal tariffs and therefore its incentive for unilaterally opting out of trade …