Regional Integration and Lobbying for Tariffs Against Nonmembers

Details

Serval ID
serval:BIB_0A3A541F338A
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Regional Integration and Lobbying for Tariffs Against Nonmembers
Journal
International Economic Review
Author(s)
Cadot O., de Melo J., Olarreaga M.
ISSN
0020-6598
Publication state
Published
Issued date
1999
Peer-reviewed
Oui
Volume
40
Number
3
Pages
635-658
Language
english
Abstract
Using an extension of the influence-driven lobbying approach developed by Grossman and Helpman, we study the impact of regional integration arrangements (RIAs) on trade policy towards non-members in a three-good, three-country model. We explore under what conditions the formation of an RIA between countries A and B leads, through lobbying pressure, to a higher or lower tariff against country C. Comparing free trade areas (FTAs) with and without rules of origin and customs unions (CUs) with varying degrees of economic and political integration, we show how increasingly deep integration, both within an FTA and a CU, can lead to rising protection against non-member imports. These results, which abstract from two differences between FTAs and CUs, namely the extent of free-riding in CUs and the component of a CU?s tariffs designed to improve the members? terms of trade, need to be qualified accordingly. As it stands, the results nevertheless suggest that FTAs are likely to welfare-dominate CUs.
Keywords
customs union, free trade area, political economy
Web of science
Create date
19/11/2007 10:28
Last modification date
20/08/2019 13:32
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