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Are Trade Blocs Conducive to Free Trade?

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  • Campa, Jose Manuel
  • Sorenson, Timothy L

Abstract

Is integration conducive to free trade equilibria? In the context of an infinitely repeated tariff-setting game with intraindustry trade, integration of numerous very small provinces promotes free trade by deterring the exercise of market power by a large dominant province. If the dominant province is smaller than the rest of the world combined, integration promotes free trade if it results in multiple equal-sized blocs. Free trade is less likely the higher the degree of integration in such a world but it is always more likely than in a world with one very dominant trading partner. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Campa, Jose Manuel & Sorenson, Timothy L, 1996. "Are Trade Blocs Conducive to Free Trade?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 263-273, June.
    • Handle: RePEc:bla:scandj:v:98:y:1996:i:2:p:263-73
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    Cited by:

    1. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
    2. Park, Jee-Hyeong, 2000. "International trade agreements between countries of asymmetric size," Journal of International Economics, Elsevier, vol. 50(2), pages 473-495, April.
    3. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers.
    4. Emanuel Ornelas, 2007. "Exchanging market access at the outsiders' expense: the case of customs unions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(1), pages 207-224, February.
    5. Dr. Caroline Ntara, 2022. "What Does Africa Stand to Gain from the African Continental Free Trade Area?," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 69-90.

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