Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245394 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9213
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study the stability of trade policy arrangements under two regulatory scenarios, with/without PTAs. Unlike previous papers, we consider an extensive set of trade policy constellations and allow for unlimited farsightedness of negotiating parties. We find global free trade (GFT) to be uniquely stable under symmetry, with/without PTAs. When two countries are smaller (larger) than the third, availability of PTAs decreases (increases) the stability of GFT. Away from symmetry, GFT is not attainable, and without PTAs the non-cooperative MFN regime is the only stable outcome. The effect of (dis-)allowing PTAs thus depends on the size asymmetry of countries.
Subjects: 
trade policy arrangements
stability
unlimited farsightedness
JEL: 
F13
F55
Document Type: 
Working Paper
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