Tariff protection and trade agreements

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


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.


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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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