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Welfare and Customs Unions

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  • Carsten Kowalczyk

Abstract

This paper proposes that Viner's celebrated trade diversion and trade creation terminology for the customs union problem be abandoned. As the alternative is offered a welfare calculus based upon the terms-of-trade and volume-of-trade taxonomy from the theory of tariffs. The paper discusses, by application of this calculus, the two outstanding controversies in the theory of customs unions.

Suggested Citation

  • Carsten Kowalczyk, 1990. "Welfare and Customs Unions," NBER Working Papers 3476, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3476
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    References listed on IDEAS

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    1. Raymond RIEZMAN, 2013. "Customs Unions and the Core," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 3, pages 33-43, World Scientific Publishing Co. Pte. Ltd..
    2. John Kennan & Raymond Riezman, 2013. "Optimal Tariff Equilibria with Customs Unions," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 5, pages 53-66, World Scientific Publishing Co. Pte. Ltd..
    3. Raymond RIEZMAN, 2013. "A 3 × 3 Model of Customs Unions," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 1, pages 7-20, World Scientific Publishing Co. Pte. Ltd..
    4. John Kennan & Raymond Riezman, 2013. "Do Big Countries Win Tariff Wars?," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 4, pages 45-51, World Scientific Publishing Co. Pte. Ltd..
    5. Franz Gehrels, 1956. "Customs Union from a Single-Country Viewpoint," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 61-64.
    6. Appleyard, Dennis R. & Conway, Patrick J. & Field, Alfred Jr., 1989. "The effects of customs unions on the pattern and terms of trade in a Ricardian model with a continuum of goods," Journal of International Economics, Elsevier, vol. 27(1-2), pages 147-164, August.
    7. Harry G. Johnson, 1965. "An Economic Theory of Protectionism, Tariff Bargaining, and the Formation of Customs Unions," Journal of Political Economy, University of Chicago Press, vol. 73(3), pages 256-256.
    8. Wonnacott, Paul & Wonnacott, Ronald, 1984. "How General Is the Case for Unilateral Tariff Reduction?," American Economic Review, American Economic Association, vol. 74(3), pages 491-491, June.
    9. Bond, Eric W, 1990. "The Optimal Tariff Structure in Higher Dimensions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 103-116, February.
    10. Kirman, Alan P, 1973. "Trade Diverting Customs Unions and Welfare Improvement: A Comment," Economic Journal, Royal Economic Society, vol. 83(331), pages 890-894, September.
    11. Conway, Patrick J & Appleyard, Dennis R & Field, Alfred J, Jr, 1989. "Trade Agreements vs. Unilateral Tariff Reductions: Evidence from Modeling with a Continuum of Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 775-794, November.
    12. Michaely, Michael, 1976. "The assumptions of Jacob Viner's theory of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 75-93, February.
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    Citations

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    Cited by:

    1. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers.
    2. Jiandong Ju & Kala Krishna, 2005. "Firm behaviour and market access in a Free Trade Area with rules of origin," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 290-308, February.
    3. Carsten Kowalczyk & Tomas Sjostrom, 1993. "Bringing GATT into the Core," NBER Working Papers 4343, National Bureau of Economic Research, Inc.
    4. Bagwell, Kyle & Staiger, Robert W., 1997. "Multilateral tariff cooperation during the formation of customs unions," Journal of International Economics, Elsevier, vol. 42(1-2), pages 91-123, February.
    5. Kyle Bagwell & Robert W. Staiger, 1993. "Multilateral Tarriff Cooperation During the Formation of Regional Free Trade Areas," NBER Working Papers 4364, National Bureau of Economic Research, Inc.
    6. Carsten Kowalczyk & Raymond Riezman, 2013. "Trade Agreements," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 13, pages 367-388, Palgrave Macmillan.
    7. P. J. Lloyd, 1993. "Global Integration," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 26(1), pages 35-48, January.
    8. Carsten Kowalczyk & Ronald J. Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," NBER Working Papers 4198, National Bureau of Economic Research, Inc.
    9. Raymond Riezman, 1999. "Can Bilateral Trade Agreements Help Induce Free Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 32(3), pages 751-766, May.
    10. Paul Brenton & Natalia Tonrdyeva & Jhon Whalley, 2014. "The Potential Trade Effects of an FTA between the EU and Russia," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 5, pages 83-103, World Scientific Publishing Co. Pte. Ltd..
    11. Hoekman, Bernard & Djankov, Simeon, 1997. "Effective protection and investment incentives in Egypt and Jordan during the transition to free trade With Europe," World Development, Elsevier, vol. 25(2), pages 281-291, February.
    12. Arvind Panagariya, 2000. "Preferential Trade Liberalization: The Traditional Theory and New Developments," Journal of Economic Literature, American Economic Association, vol. 38(2), pages 287-331, June.
    13. Bagwell, Kyle & Staiger, Robert W, 1997. "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 291-319, May.
    14. Norman S. Fieleke, 1992. "One trading world, or many: the issue of regional trading blocs," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-20.
    15. Arvind Panagariya, 2003. "Preferential Trading and Welfare: The Small-Union Case Revisited," International Trade 0308009, University Library of Munich, Germany.
    16. Carsten Kowalczyk, 1992. "Paradoxes in integration theory," Open Economies Review, Springer, vol. 3(1), pages 51-59, February.
    17. Jiandong Ju & Kala Krishna, "undated". "Market Access and Welfare Effects of Free Trade Areas without Rules of Origin," EPRU Working Paper Series 96-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    18. Mavroidis, Petros C., 2011. "Always look at the bright side of non-delivery: WTO and Preferential Trade Agreements, yesterday and today," World Trade Review, Cambridge University Press, vol. 10(3), pages 375-387, July.
    19. Carsten Kowalczyk, 1994. "Norway: The Trade Effects of European Integration: A Comment," The World Economy, Wiley Blackwell, vol. 17(5), pages 697-700, September.

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