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Regional Economic Integration and Article XXIV of the GATT
Author(s) -
Goto Junichi,
Hamada Koichi
Publication year - 1999
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00181
Subject(s) - economics , regionalism (politics) , welfare , economic integration , incentive , international economics , regional integration , international trade , microeconomics , political science , market economy , politics , law , democracy
This paper studies the economic impact of regionalism under the realistic assumptions of constant tariffs and asymmetric bloc formation. As an extension of the Krugman framework, the impact is decomposed into several components, each of which has a clear economic implication. Economic integration definitely worsens outsiders’ welfare even if the external tariffs of the bloc are unraised. Bloc members’ welfare first increases with the expansion of the bloc; but when about half of the world is united into the bloc, welfare begins to decrease. Simulation results shed some light on the incentive structure of major participants, who face various configurations of regional integration.