The customs union issue: Why do we observe so few of them?

Facchini G, Silva P, Willmann G (2013)
Journal of International Economics 90(1): 136-147.

Zeitschriftenaufsatz | Veröffentlicht | Englisch
 
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Autor*in
Facchini, Giovanni; Silva, Peri; Willmann, GeraldUniBi
Abstract / Bemerkung
The number of preferential trade agreements has greatly increased over the past two decades, yet most existing arrangements take the form of free trade areas, and less than 10% can be considered to be fully fledged customs unions. This paper develops a political economy model of trade policy under imperfect competition to provide a positive explanation for the prevalence of free trade areas. In a three-country setting, a representative from each prospective member is elected to determine the tariffs to be applied on imported goods. Under a customs union, the necessity to coordinate tariffs leads voters to strategically delegate power to more protectionist representatives. We show that strategic delegation may imply that free trade areas increase the prospective member countries' welfare compared to customs unions. Moreover, the model also indicates conditions under which free trade areas are more likely to be politically viable than customs unions. (C) 2012 Elsevier B.V. All rights reserved.
Stichworte
Strategic delegation; Preferential trade agreements; Political economy; of trade protection
Erscheinungsjahr
2013
Zeitschriftentitel
Journal of International Economics
Band
90
Ausgabe
1
Seite(n)
136-147
ISSN
0022-1996
Page URI
https://pub.uni-bielefeld.de/record/2607210

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Facchini G, Silva P, Willmann G. The customs union issue: Why do we observe so few of them? Journal of International Economics. 2013;90(1):136-147.
Facchini, G., Silva, P., & Willmann, G. (2013). The customs union issue: Why do we observe so few of them? Journal of International Economics, 90(1), 136-147. doi:10.1016/j.jinteco.2012.09.004
Facchini, G., Silva, P., and Willmann, G. (2013). The customs union issue: Why do we observe so few of them? Journal of International Economics 90, 136-147.
Facchini, G., Silva, P., & Willmann, G., 2013. The customs union issue: Why do we observe so few of them? Journal of International Economics, 90(1), p 136-147.
G. Facchini, P. Silva, and G. Willmann, “The customs union issue: Why do we observe so few of them?”, Journal of International Economics, vol. 90, 2013, pp. 136-147.
Facchini, G., Silva, P., Willmann, G.: The customs union issue: Why do we observe so few of them? Journal of International Economics. 90, 136-147 (2013).
Facchini, Giovanni, Silva, Peri, and Willmann, Gerald. “The customs union issue: Why do we observe so few of them?”. Journal of International Economics 90.1 (2013): 136-147.