The integration of the former communist countries of central and eastern Europe into the European Union creates a dilemma for the EU's regional policy. The EU's expenditure on regional policy (its 'active' regional policy) has been guided by political reactions to deepening or enlarging the EU,...

This paper analyzes how the sequential formation of free trade areas affects the volume of trade between member countries. In a three--country, three--good model, if two countries have a free trade area, and both sign a similar agreement with the third, trade between the two decreases, and...

This paper studies `knockout' auctions, typically organized by bidding rings, in which the winning bidder makes side-payments to all losing bidders. These side-payments provide an incentive for the ring members to bid higher than they would have in an identical public auction. As a consequence,...