Strategic Regional Integration
SERIES Working Papers N. 07/2016
15 Pages Posted: 18 Nov 2016
Date Written: November 17, 2016
We analyze the impact of globalization on the incentive to strengthen regional integration. In a simple three-country oligopolistic trade model, we demonstrate that increased external competitive pressure may induce governments, influenced by producer interests, to lower intra-regional trade costs in order to mitigate the effects of external competition on local businesses.
Keywords: Regional integration; Globalization; Cournot competition
JEL Classification: F12, F15, F6
Suggested Citation: Suggested Citation