Are Trade Blocs Conducive to Free Trade?

IB-94-l

Posted: 23 Aug 1998

See all articles by José Manuel Campa

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School; National Bureau of Economic Research (NBER)

Tim Sorenson

affiliation not provided to SSRN

Abstract

This paper examines the sustainability of free trade as an equilibrium outcome of an infinitely repeated tariff-setting game in a model of intraindustry trade. The paper shows that in a world consisting of a single dominant country (or "province") and numerous small countries, integration of the latter raises the likelihood of free trade. However, in a world consisting of equally sized integrated trading blocs, free trade is less likely the smaller the number of trading blocs.

JEL Classification: F17

Suggested Citation

Campa, José Manuel and Sorenson, Timothy L., Are Trade Blocs Conducive to Free Trade?. IB-94-l, Available at SSRN: https://ssrn.com/abstract=6823

José Manuel Campa (Contact Author)

University of Navarra - Madrid Campus - IESE Business School ( email )

Camino del Cerro del Aguila 3
Madrid, 28023
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Timothy L. Sorenson

affiliation not provided to SSRN

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