IDEAS home Printed from https://ideas.repec.org/a/kap/jincot/v15y2015i3p223-238.html
   My bibliography  Save this article

Free Trade Networks on Non-tariff Barriers

Author

Listed:
  • Yasunori Okumura

Abstract

In this paper, we examine the formation of free trade agreements on eliminating non-tariff barriers as a network formation game. A firm faces an import volume quota in a foreign country, which it cannot exceed but can be removed through bilateral free trade agreements. We focus on the stable free trade agreements networks, considering the case where each country determines the quotas of the foreign firms. We show that global free trade may not be achieved in any stable network. Moreover, all countries may be autarkic in a stable network. Finally, we demonstrate that our main results continue to hold regardless of the type of non-tariff barriers, such as import licences, import share quotas, and technical measures for increasing the production costs of foreign firms. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Yasunori Okumura, 2015. "Free Trade Networks on Non-tariff Barriers," Journal of Industry, Competition and Trade, Springer, vol. 15(3), pages 223-238, September.
    • Handle: RePEc:kap:jincot:v:15:y:2015:i:3:p:223-238
    DOI: 10.1007/s10842-014-0184-2
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10842-014-0184-2
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10842-014-0184-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kamal Saggi & Halis Murat Yildiz, 2018. "Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 8, pages 168-185, World Scientific Publishing Co. Pte. Ltd..
    2. Zhang, Jin & Cui, Zhiwei & Zu, Lei, 2014. "The evolution of free trade networks," Journal of Economic Dynamics and Control, Elsevier, vol. 38(C), pages 72-86.
    3. Sang-Seung, Yi, 1996. "Endogenous formation of customs unions under imperfect competition: open regionalism is good," Journal of International Economics, Elsevier, vol. 41(1-2), pages 153-177, August.
    4. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April.
    5. Kamal Saggi, 2018. "Preferential Trade Agreements And Multilateral Tariff Cooperation," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 6, pages 127-155, World Scientific Publishing Co. Pte. Ltd..
    6. Sanjeev Goyal & Sumit Joshi, 2006. "Bilateralism And Free Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 749-778, August.
    7. repec:bla:reviec:v:8:y:2000:i:2:p:336-47 is not listed on IDEAS
    8. Taiji Furusawa & Hideo Konishi, 2005. "Free Trade Networks With Transfers," The Japanese Economic Review, Japanese Economic Association, vol. 56(2), pages 144-164, June.
    9. Bond, Eric W. & Syropoulos, Constantinos, 1996. "The size of trading blocs Market power and world welfare effects," Journal of International Economics, Elsevier, vol. 40(3-4), pages 411-437, May.
    10. Eric W. Bond & Raymond G. Riezman & Constantinos Syropoulos, 2013. "A strategic and welfare theoretic analysis of free trade areas," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 8, pages 101-127, World Scientific Publishing Co. Pte. Ltd..
    11. Paul Belleflamme & Francis Bloch, 2004. "Market sharing agreements and collusive networks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(2), pages 387-411, May.
    12. Kamal Saggi & Halis Murat Yildiz, 2018. "Bilateralism, multilateralism, and the quest for global free trade," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 7, pages 156-167, World Scientific Publishing Co. Pte. Ltd..
    13. Ono, Yoshiyasu, 1990. "Foreign penetration and national welfare under oligopoly," Japan and the World Economy, Elsevier, vol. 2(2), pages 141-154, June.
    14. Oecd & Nea, 2011. "Bilateral and Multilateral Agreements," Nuclear Law Bulletin, OECD Publishing, vol. 2010(2), pages 93-106.
    15. Hiroshi Mukunoki & Kentaro Tachi, 2006. "Multilateralism and Hub‐and‐Spoke Bilateralism," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 658-674, September.
    16. Fumi Kiyotaki & Toshiji Miyakawa, 2013. "Barriers to Global Free Trade through Bilateral Agreements," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 536-548, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chessa, Michela & Persenda, Arnaud & Torre, Dominique, 2023. "Brexit and Canadadvent: An application of graphs and hypergraphs to recent international trade agreements," International Economics, Elsevier, vol. 175(C), pages 1-12.
    2. Maria Cipollina & Federica Demaria & Filomena Pietrovito, 2016. "Determinants of Trade: the Role of Innovation in Presence of Quality Standards," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 455-475, December.
    3. Okumura, Yasunori, 2015. "Volume and share quotas in Cournot competition," Economic Modelling, Elsevier, vol. 47(C), pages 137-144.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nken, Moïse & Yildiz, Halis Murat, 2017. "Implications of multilateral tariff bindings on the formation of preferential trade agreements and quest for global free trade," MPRA Paper 83209, University Library of Munich, Germany.
    2. Kawabata, Yasushi, 2015. "Endogenous formation of free trade agreements in vertically related markets," Research in Economics, Elsevier, vol. 69(2), pages 214-223.
    3. Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1125-1231, December.
    4. Staiger, Robert & Bagwell, Kyle & Bown, Chad, 2015. "Is the WTO Passé?," CEPR Discussion Papers 10672, C.E.P.R. Discussion Papers.
    5. Fumi Kiyotaki & Toshiji Miyakawa, 2013. "Barriers to Global Free Trade through Bilateral Agreements," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 536-548, August.
    6. James Lake, 2017. "Free Trade Agreements As Dynamic Farsighted Networks," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 31-50, January.
    7. Paul Missios & Halis Murat Yildiz, 2017. "Do SouthSouth preferential trade agreements undermine the prospects for multilateral free trade?," Canadian Journal of Economics, Canadian Economics Association, vol. 50(1), pages 111-161, February.
    8. Noritsugu Nakanishi, 2011. "Farsightedly Stable FTA Structures," Discussion Papers 1114, Graduate School of Economics, Kobe University.
    9. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 317-390, Elsevier.
    10. Saggi, Kamal & Wong, Woan Foong & Yildiz, Halis Murat, 2019. "Should the WTO require free trade agreements to eliminate internal tariffs?," Journal of International Economics, Elsevier, vol. 118(C), pages 316-330.
    11. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    12. Moïse Nken & Halis Murat Yildiz, 2022. "Implications of multilateral tariff bindings on the extent of preferential trade agreement formation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 301-347, February.
    13. Ana Mauleon & Huasheng Song & Vincent Vannetelbosch, 2010. "Networks of Free Trade Agreements among Heterogeneous Countries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(3), pages 471-500, June.
    14. Saggi, Kamal & Wong, Woan Foong & Yildiz, Halis Murat, 2017. "Preferential Trade Agreements and Rules of the Multilateral Trading System," MPRA Paper 76330, University Library of Munich, Germany.
    15. Stoyanov, Andrey & Yildiz, Halis Murat, 2015. "Preferential versus multilateral trade liberalization and the role of political economy," European Economic Review, Elsevier, vol. 80(C), pages 140-164.
    16. Chen, Maggie Xiaoyang & Joshi, Sumit, 2010. "Third-country effects on the formation of free trade agreements," Journal of International Economics, Elsevier, vol. 82(2), pages 238-248, November.
    17. Ben Zissimos, 2011. "Why are Trade Agreements Regional?," Review of International Economics, Wiley Blackwell, vol. 19(1), pages 32-45, February.
    18. Halis Murat Yildiz, 2014. "Hub and spoke trade agreements under oligopoly with asymmetric costs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(1), pages 97-110, February.
    19. Kamal Saggi & Alan Woodland & Halis Murat Yildiz, 2018. "On the Relationship between Preferential and Multilateral Trade Liberalization: The Case of Customs Unions," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 9, pages 186-222, World Scientific Publishing Co. Pte. Ltd..
    20. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Free trade agreements; Non-tariff barriers; Network formation; Cournot; F13; F12; D85;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jincot:v:15:y:2015:i:3:p:223-238. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.