Tariff protection and trade agreements

  • Leonardo Medrano Centro de Investigación y Docencia Económicas
Keywords: tariffs, imported goods, free trade agreement, custom union

Abstract

This paper studies the optimal tariff rates on goods imported from the rest of the world when a commercial club accepts a new partner. It shows that when a new member is accepted into the club, the other members of a free trade agreement have incentives to reduce tariffs on the rest of the world's goods. However, when the trade agreement is a custom union, the union may have incentives to increase the common external tariff. This happens when the industry of the custom union is small compared to the world industry.

References

Brander, J. and B. Spencer (1984). “Tariff Protection an Imperfect Competition”, in H. Kierzkowski (ed.), Monopolistic Competition in International Trade, Oxford University Press.

Dixit, A. (1984). “International Trade Policy for Oligopolistic Industries”, Economic Journal, Supplement, pp. 1-16.

El-Agraa, A. M. (1989). The Theory and Measurement of International Economic Integration, The MacMillan Press LTD.

Mas-Colell, A., M. D. Whinston y J. R. Green (1995). Microeconomic Theory, Oxford University Press.

Medrano, L. (1998). “Sobre la teoría de la unión aduanera y la política arancelaria”, Estudios Económicos, vol. 12, no.1.

Richardson, M. (1993). “Endogenous Protection and Trade Diversion”, Journal of International Economics, no. 34, pp. 309-324.

Romero, J. (1991). “La teoría de la unión aduanera y su relevancia para México ante el Acuerdo de Libre Comercio con Estados Unidos y Canadá”, Estudios Económicos, vol. 6, no. 2.

Published
01-07-1999
How to Cite
MedranoL. (1999). Tariff protection and trade agreements. Estudios Económicos, 14(2), 217-229. https://doi.org/10.24201/ee.v14i2.224
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