The New Regionalism: Trade Liberalization or Insurance?

Posted: 21 Nov 2000

See all articles by Carlo Perroni

Carlo Perroni

University of Warwick - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

John Whalley

University of Western Ontario - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for International Governance and Innovation (CIGI)

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Abstract

Several of the recently negotiated regional trade agreements contain significantly fewer concessions by the large countries to smaller countries than vice versa. In this paper, we compute post-retaliation Nash tariffs by region under various regional trade arrangements using a calibrated numerical general equilibrium model of world trade. Regional agreements constrain strategic behaviour within each trading area, and (in the Customs Union case) enhance it outside the bloc. Results confirm the intuition that without side payments large-small country regional agreements (such as the Canada-U.S. agreement) would not have occurred.

JEL Classification: F13

Suggested Citation

Perroni, Carlo and Whalley, John, The New Regionalism: Trade Liberalization or Insurance?. Canadian Journal of Economics, Vol. 33, Issue 1, February 2000. Available at SSRN: https://ssrn.com/abstract=238613

Carlo Perroni (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

John Whalley

University of Western Ontario - Department of Economics ( email )

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Canada
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519-661-3666 (Fax)

HOME PAGE: http://www.ssc.uwo.ca/economics/faculty/

National Bureau of Economic Research (NBER)

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

HOME PAGE: http://www.CESifo.de

Centre for International Governance and Innovation (CIGI) ( email )

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Waterloo, Ontario N2L 6C2
Canada

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