On the theory of customs union and tariff policy

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

Abstract

This paper studies the changes in optimal tariffs on goods from the rest of the world due to the signing of a free trade agreement and the build up of a custom union. It shows that a trade agreement that reduces or eliminates tariffs between member countries, gives them the incentives to reduce tariffs on goods from the rest of the world regardless of the existence of a custom union in an agreement. It also shows that tariffs reduction is greater when the agreement does not contemplate a custom union.

References

Brander, J. y B. Spencer (1984). "Tariff Protection and Imperfect Competition", en H. Kierzkowski (comp.), Monopolistic Competition in International Trade, Oxford, Oxford University Press.

Dixit, A. (1984). "International Trade Policy for Oligopolistic Industries", Economic Journal (suplemento), 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, Oxford University Press.

Richarson, M. (1993). "Endogenous Protection and Trade Diversion", Journal of International Economics, 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, núm. 2.

Published
01-01-1997
How to Cite
MedranoL. (1997). On the theory of customs union and tariff policy. Estudios Económicos, 12(1), 53-65. https://doi.org/10.24201/ee.v12i1.249
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