The Welfare Implications of Trading Blocs among Countries with Different Endowments

Antonio Spilimbergo, Ernesto Stein

NBER Working Paper No. 5472
Issued in March 1996
NBER Program(s):International Finance and Macroeconomics Program

In this paper, we present a model where trade is motivated both by preference for variety and comparative advantages. We use this framework to analyze the welfare implications of trading blocs among countries with different endowments with and without transportation costs. In this framework, we address the following issues: a) the welfare implications of the consolidation of the world into a few trading blocs; b) the different incentives that rich and poor countries have in choosing their partners in trade arrangements; c) whether the welfare consequences of continental preferential trade arrangements depend on the relative endowments.

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Document Object Identifier (DOI): 10.3386/w5472

Published: The Welfare Implications of Trading Blocs among Countries with Different Endowments, Antonio Spilimbergo, Ernesto Stein. in The Regionalization of the World Economy, Frankel. 1998

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