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The Welfare Implications of Trading Blocs Among Countries with Different Endowments

Posted: 18 Mar 1998  

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

Ernesto Stein

Inter-American Development Bank (IDB)

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Abstract

In this paper, we present a model where trade is motivated both by preference for variety and comparative advantages. We use this framework to analyze the welfare implications of trading blocs among countries with different endowments with and without transportation costs.

In this framework, we address the following issues: a) the welfare implications of the world into a few trading blocs, b) the different incentives that rich and poor countries have in choosing their partners in trade arrangements, and c) whether the welfare consequences of continental preferential trade arrangements depends on the relative endowments.

JEL Classification: F13

Suggested Citation

Spilimbergo, Antonio and Stein, Ernesto, The Welfare Implications of Trading Blocs Among Countries with Different Endowments. Available at SSRN: https://ssrn.com/abstract=60188

Antonio Spilimbergo (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
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202-623-6346 (Phone)
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Centre for Economic Policy Research (CEPR)

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University of Michigan at Ann Arbor - The William Davidson Institute ( email )

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Ann Arbor, MI 48109-1234
United States

Ernesto Hugo Stein

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States

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