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Trade Bloc Formation Under Imperfect Competition
by
Paola Conconi
,
Paola Conconi Y
| Citations: | 1 - 0 self |
BibTeX
@MISC{Conconi_tradebloc,
author = {Paola Conconi and Paola Conconi Y},
title = {Trade Bloc Formation Under Imperfect Competition},
year = {}
}
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Abstract
We examine the endogenous formation of trade blocs when markets are characterized by imperfect competition and governments use import taris and export subsidies to alter the strategic interaction between oligopolistic firms. Using a simple model of intra-industry trade between three ex-ante symmetric countries, we find that, while `pure' customs unions---entailing tari cooperation only---are stepping stones towards global free trade, `impure' customs unions--- involving the coordinated use of both taris and subsidies---are stumbling blocs against it.
