Yildiz, Halis Murat (2011): Hub and spoke trade agreements under oligopoly with asymmetric costs.
Download (294kB) | Preview
Using an oligopoly model of trade, we study the individual and world welfare implications of hub and spoke trade agreements. Under a hub and spoke regime, the hub country can benefit at the expense of the spokes relative to free trade. Furthermore, if the hub is sufficiently efficient compared to the spokes, such a regime can yield higher global welfare than free trade. Preferential treatment of the hub country in its export markets improves world welfare because it helps allocate a larger share of the world's output to a low cost location.
|Item Type:||MPRA Paper|
|Original Title:||Hub and spoke trade agreements under oligopoly with asymmetric costs|
|Keywords:||oligopoly, hub and spoke trade agreements, global free trade|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy; International Trade Organizations
F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies
|Depositing User:||Halis Murat Yildiz|
|Date Deposited:||23. Nov 2011 18:15|
|Last Modified:||14. Feb 2013 07:21|
Bagwell, Kyle, and Robert W. Staiger (1997). "Multilateral Tariff Cooperation during the Formation of Free Trade Areas," International Economic Review, 38, 291-319.
Bagwell, Kyle, and Robert W. Staiger (1998). "Will Preferential Agreements undermine the Multilateral Trading System?," Economic Journal, 108, 1162-1182.
Bergstrom, Theodore and Hal R. Varian, 1985. "When are Nash Equilibria Independent of the Distribution of Agents' Characteristics," Review of Economic Studies LII, 715-718.
Bhagwati, Jagdish, Arvind Panagariya, and Pravin Krishna, eds., 1999. Trading Blocs, The MIT Press, Cambridge, MA.
Blackhurst, Richard and David Henderson, 1993. "Regional Integration Agreements, World Integration and the GATT" in Kym Anderson and Richard Blackhurst (eds.), Regional Integration and the Global Trading System, London: HarvesterWheatsheaf, 408--35.
Brander, James A., Paul R. Krugman, 1983. "A `Reciprocal Dumping' Model of International Trade," Journal of International Economics 15, 313-323.
Collie, David, 1993. "Strategic Trade Policy under asymmetric oligopoly," European Journal of Political Economy 9(2), 275-280.
Furusawa, Taiji and Hideo Konishi, 2007, "Free Trade Networks," Journal of International Economics 72, 310-335.
Goyal, Sanjeev and Sumit Joshi, 2006. "Bilateralism and Free Trade," International Economic Review 47, 749-778.
Jacob, Viner, 1950. The Custom Union Issue. New York: Carnegie Endowment for International Peace.
Kowalczyk, Carsten, ed., 1999. Economic Integration and International Trade. International Library of Critical Writings in Economics. Edward Elgar Publishing Ltd., Cheltenham, U.K.
Kowalczyk, Carsten 2000. "Welfare and Integration," International Economic Review 41(20), 483-494.
Kowalczyk, Carsten and Ronald Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," Natioanl Bureau of Economic Research Working Paper No. 4198.
Krueger, Anne O., 1997. "Free Trade Agreements versus Customs Unions," Journal of Development Economics 54, 169--87.
Lahiri, Sajal and Yoshiyasu Ono, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal 98, 1199--1202.
Lahiri, Sajal and Yoshiyasu Ono, 1997. "Asymmetric Oligopoly, International Trade, and Welfare: A Synthesis," Journal of Economics 65(3), 291--310.
Mukunoki, Hiroshi and Kentaro Tachi, 2006 "Multilateralism and Hub-and-Spoke Bilateralism," Review of International Economics 14, 658-674.
Ornelas, Emanuel, 2005, "Endogenous Free Trade Agreements and the Multilateral Trading System," Journal of International Economics 67, 471-497.
Puga, Diego and Anthony Venables, 1997. "Preferential Trading Arrangements and Industrial Location," Journal of International Economics 43, 347-368.
Richardson, Martin, 1995. "Tariff Revenue Competition in a Free Trade Area," European Economic Review 39(7), 1429-1437.
Wonnacott, Paul, 1996. "Beyond NAFTA -- The Design of a Free Trade Agreement of the Americas." In The Economics of Preferential Trade Agreements, Bhagwati, Jagdish and Arvind Panagariya, eds. Washington, DC: American Enterprise Institute.
Yi, S.-S., 2000. "Free-Trade Areas and Welfare: An Equilibrium Analysis," Review of International Economics 8, 336-347.