arXiv Open Access 2021

The Formation of Global Free Trade Agreement

Akira Okada Yasuhiro Shirata

Lihat Sumber

Abstrak

We investigate the formation of Free Trade Agreement (FTA) in a competing importers framework with $n$ countries. We show that (i) FTA formation causes a negative externality to non-participants, (ii) a non-participant is willing to join an FTA, and (iii) new participation may decrease the welfare of incumbent participants. A unique subgame perfect equilibrium of a sequential FTA formation game does not achieve global free trade under an open-access rule where a new applicant needs consent of members for accession, currently employed by many open regionalism agreements including APEC. We further show that global FTA is a unique subgame perfect equilibrium under an open-access rule without consent.

Topik & Kata Kunci

econ.TH

Penulis (2)

Akira Okada

Yasuhiro Shirata

Format Sitasi

APA MLA BibTeX

Okada, A., Shirata, Y. (2021). The Formation of Global Free Trade Agreement. https://arxiv.org/abs/2103.16118

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Informasi Jurnal

Tahun Terbit: 2021
Bahasa: en
Sumber Database: arXiv
Akses: Open Access ✓