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Abstract

This paper examines the investment and welfare effects ofa preferential trading area PTA on member and non-member countrieswhen countries differ in their relative size. I numerically solve athree-country and two-good model to characterize equilibriapertaining to investment diverting and creating effects of apreferential trade area. I conclude that welfare benefits of apreferential trade area are non-negative for the member countries,and could go either way for the non-member countries depending ontheir relative size. There exist equilibria which, given theparameter values and the relative size, result in welfareimprovement in non-member countries.



Item Type: MPRA Paper -

Original Title: Preferential trading areas: investment and welfare effects when countries differ in their size-

Language: English-

Keywords: Preferential Trade Areas; Investment effects; Size of a country-

Subjects: F - International Economics > F1 - Trade > F15 - Economic IntegrationF - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International BusinessF - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation-





Autor: Uppal, Yogesh

Fuente: https://mpra.ub.uni-muenchen.de/15193/







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