Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
963193 | Journal of International Economics | 2007 | 26 Pages |
Abstract
The paper examines the formation of free trade agreements (FTAs) as a network formation game. We consider an n-country model in which (possibly asymmetric) countries trade differentiated industrial commodities. We show that if all countries are symmetric, the complete FTA network is pairwise stable and it is the unique stable network if industrial commodities are not highly substitutable. We also compare FTAs and customs unions (CUs) as to which of these two regimes facilitates global trade liberalization, noticing that unlike CUs, each signatory of an FTA can have another FTA without consent of other member countries.
Related Topics
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Authors
Taiji Furusawa, Hideo Konishi,