Dynamic preferential trade agreement formation and the role of political economy.

Using a dynamic preferential trade agreement (PTA) formation model, we show that political biases in exporting and import‐competing sectors substantially impact the extent of PTA formation. While both exclusion and free riding incentives constrain the expansion to global free trade in a free trade a...

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Publicado en:Economic Inquiry Vol. 62; no. 2; pp. 748 - 782
Autores principales: Chi, Eric Conglin, Yildiz, Halis Murat
Formato: Artículo
Publicado: Wiley-Blackwell Apr2024
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Acceso en línea:Ver este registro en EBSCOhost
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        atl: Dynamic preferential trade agreement formation and the role of political economy.
      aug:
        au:
          Chi, Eric Conglin
          Yildiz, Halis Murat
        affil:
          Department of Economics and Finance, University of Guelph, Guelph Ontario,, Canada
          Department of Economics, Toronto Metropolitan University, Toronto Ontario,, Canada
      su:
        International trade
        Free trade
        Customs unions
      sug:
        subj:
          International trade
          International Trade Financing
          Free trade
          Customs unions
      keyword:
        customs union
        free trade agreement
        Markov perfect equilibrium
        political economy
        preferential trade agreement
        customs union
        free trade agreement
        Markov perfect equilibrium
        political economy
        preferential trade agreement
      ab: Using a dynamic preferential trade agreement (PTA) formation model, we show that political biases in exporting and import‐competing sectors substantially impact the extent of PTA formation. While both exclusion and free riding incentives constrain the expansion to global free trade in a free trade agreement (FTA) game, only the former incentive arises in a customs union (CU) game. When we endogenize the choice between FTAs and CUs, the tension between the flexibility benefit of FTAs and the coordination benefit of CUs reveals that FTAs always serve as PTA building blocks while CUs may serve as PTA building or stumbling blocks.
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    language: English
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