IDEAS home Printed from https://ideas.repec.org/a/ris/integr/0580.html
   My bibliography  Save this article

Why Is Open Regionalism Not Always Good?

Author

Listed:
  • Loke, Wai-Heng

    (University of Nottingham Ningbo China)

  • Winters, L. Alan

    (University of Sussex)

Abstract

When the Asia Pacific Economic Cooperation (APEC) formally adopted the principle of “open regionalism” (OR) in its trade liberalization in 1991, many were optimistic that this approach suggested the bloc as a stepping stone toward global free trade. This optimistic view was reinforced by the economic theorizing of Sang-Seung Yi (1996). This paper shows formally via a simple model why OR may fail. We unpick Yi (1996) systematically and explain that OR works in his model because of quasilinear preferences and Ricardian technology assumptions. Once these assumptions are replaced with constant lasticity of substitution (CES) preferences and increasing marginal costs, OR fails to ensure global free trade as an equilibrium when the world consists of a country that is sufficiently larger than the rest of the world.

Suggested Citation

  • Loke, Wai-Heng & Winters, L. Alan, 2012. "Why Is Open Regionalism Not Always Good?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 27, pages 437-465.
    • Handle: RePEc:ris:integr:0580
    as

    Download full text from publisher

    File URL: http://sejong.metapress.com/
    File Function: Full text
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Al Khourdajie, Alaa & Finus, Michael, 2020. "Measures to enhance the effectiveness of international climate agreements: The case of border carbon adjustments," European Economic Review, Elsevier, vol. 124(C).
    2. Akira Okada & Yasuhiro Shirata, 2021. "The Formation of Global Free Trade Agreement," Papers 2103.16118, arXiv.org, revised Mar 2021.

    More about this item

    Keywords

    Regional Integration; Equilibrium Coalition Structure; Welfare;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    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:ris:integr:0580. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Yunhoe Kim (email available below). General contact details of provider: https://edirc.repec.org/data/desejkr.html .

    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.