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Tariff protection and trade agreements

Author

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  • Leonardo Medrano

    (Centro de Investigación y Docencia Económicas)

Abstract

This paper studies the optimal tariff rates on goods imported from the rest of the world when a commercial club accepts a new partner. It shows that when a new member is accepted into the club, the other members of a free trade agreement have incentives to reduce tariffs on the rest of the world’s goods. However, when the trade agreement is a custom union, the union may have incentives to increase the common external tariff. This happens when the industry of the custom union is small compared to the world industry

Suggested Citation

  • Leonardo Medrano, 1999. "Tariff protection and trade agreements," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 14(2), pages 217-229.
    • Handle: RePEc:emx:esteco:v:14:y:1999:i:2:p:217-229
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    File URL: https://estudioseconomicos.colmex.mx/index.php/economicos/article/view/224/226
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    References listed on IDEAS

    as
    1. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    2. Martin Richardson, 2017. "Endogenous Protection and Trade Diversion," World Scientific Book Chapters, in: Dimensions of Trade Policy, chapter 5, pages 107-127, World Scientific Publishing Co. Pte. Ltd..
    3. José Romero, 1991. "La teoría de la unión aduanera y su relevancia para México ante el acuerdo de Libre Comercio con Estados Unidos y Canadá," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 6(2), pages 231-270.
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