Negotiating Free Trade

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Negotiating Free Trade

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Title: Negotiating Free Trade
Author: Helpman, Elhanan; Antras, Pol; Aghion, Philippe

Note: Order does not necessarily reflect citation order of authors.

Citation: Aghion, Philippe, Pol Antras, and Elhanan Helpman. 2007. Negotiating free trade. Journal of International Economics 73(1): 1-30.
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Abstract: We develop a dynamic bargaining model in which a leading country endogenously decides whether to sequentially negotiate free trade agreements with subsets of countries or engage in simultaneous multilateral bargaining with all countries at once. We show how the structure of coalition externalities shapes the choice between sequential and multilateral bargaining, and we identify circumstances in which the grand coalition is the equilibrium outcome, leading to worldwide free trade. A model of international trade is then used to illustrate equilibrium outcomes and how they depend on the structure of trade and protection. Global free trade is not achieved when the political-economy motive for protection is sufficiently large. Furthermore, the model generates both “building bloc” and “stumbling bloc” effects of preferential trade agreements. In particular, we describe an equilibrium in which global free trade is attained only when preferential trade agreements are permitted to form (a building bloc effect), and an equilibrium in which global free trade is attained only when preferential trade agreements are forbidden (a stumbling bloc effect). The analysis identifies conditions under which each of these outcomes emerges.
Published Version: http://dx.doi.org/10.1016/j.jinteco.2006.12.003
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3351239

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  • FAS Scholarly Articles [7262]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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