TY  - JOUR
AU  - Casella,Alessandra
TI  - Large Countries, Small Countries, and the Enlargement of Trade Blocs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5365
PY  - 1995
Y2  - November 1995
UR  - http://www.nber.org/papers/w5365
L1  - http://www.nber.org/papers/w5365.pdf
N1  - Author contact info:
Alessandra Casella
Department of Economics
Columbia University
420 West 118 Street
New York, NY 10027
Tel: 212/854-2459
Fax: 212/854-8059
E-Mail: ac186@columbia.edu
AB  - Are there systematic forces such that countries of different sizes participating in a free trade bloc gain differently from the entry of new members?  If economies of scale imply that firms located in large countries enjoy lower costs, then the gains from enlarging the bloc will fall disproportionately on small countries, because the entry of new members diminishes the importance of the domestic market and improves the small countries' relative competitiveness.  The theoretical prediction is clear, but the empirical analysis of trade flows towards Spain and Portugal after their 1986 entry into the European Community yields mixed results.  France and the U.K. appear to have lost market shares relative to the small countries in the Community, but the same is not true for Italy and, to a lesser degree, for Germany.
ER  -