Facchini, Giovanni; Testa, Cecilia - In: Journal of the European Economic Association 7 (2009) 5, pp. 1068-1100
This paper develops a theory of the endogenous formation of a common market in a three-country, two-factor political economy model. In the status quo, Home and Foreign implement nondiscriminatory policies toward international factor flows in order to maximize the domestic median voter's welfare....