Does a Bilateral  FTA  Pave the Way for Multilateral Free Trade? | Zendy

Nomura Ryoichi | Zendy; Ohkawa Takao | Zendy; Okamura Makoto | Zendy; Tawada Makoto | Zendy

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Does a Bilateral FTA Pave the Way for Multilateral Free Trade?

Author(s) -

Nomura Ryoichi,

Ohkawa Takao,

Okamura Makoto,

Tawada Makoto

Publication year - 2013

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/roie.12028

Subject(s) - economics , international trade , international economics , block (permutation group theory) , free trade agreement , bilateral trade , international free trade agreement , pareto principle , free trade , political science , operations management , law , mathematics , china , geometry

We determine whether a bilateral free trade agreement ( FTA ) acts as a building block for multilateral free trade ( MFT ) in a three‐country model with asymmetric domestic markets. Our main conclusions are as follows: (i) A bilateral FTA between two large countries can act as a building block for MFT ; (ii) A bilateral FTA between two small countries acts as a stumbling block for MFT ; (iii) This FTA can be Pareto improving when a multilateral trade agreement is not feasible.

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