Can a regional trade agreement benefit a nonmember country without compensating it?

Masahiro Endoh, Koichi Hamada, Koji Shimomura

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

RTAs are generally formed without any tariff concessions or transfers to nonmember countries. Can such an RTA benefit nonmembers' welfare? In a two-good three-country competitive equilibrium model in the absence of an entrepôt, an RTA without concessions to a nonmember will hurt nonmembers' welfare when goods are normal. If one of the member countries is an entrepôt, however, it definitely improves nonmembers' welfare. In a three-good three-country model, an RTA without concessions damages the nonmember's welfare, provided that all the goods are normal and substitutes, and that initial tariff levels are small.

Original languageEnglish
Pages (from-to)912-922
Number of pages11
JournalReview of International Economics
Volume21
Issue number5
DOIs
Publication statusPublished - 2013 Nov

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regional trade
trade agreement
concession
welfare
equilibrium model
damage
damages
goods
tariff

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

Cite this

Can a regional trade agreement benefit a nonmember country without compensating it? / Endoh, Masahiro; Hamada, Koichi; Shimomura, Koji.

In: Review of International Economics, Vol. 21, No. 5, 11.2013, p. 912-922.

Research output: Contribution to journalArticle

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