This paper analyses the customs union problem in a model containing a continuum of products. The continuum is in three dimensions, so that three countries each have a distinct comparative advantage. Trade patterns are endogenously determined, and changed by policy. This is in the tradition of...

Regional integration is on the rise again, despite its apparent failure among developing countries in the past. The paper first surveys the ambiguous economics of customs unions. We emphasize that the traditional dichotomy between `trade creation' and `trade diversion' is not particularly...

Using an extension of the influence-driven lobbying approach developed by Grossman and Helpman, we study the impact of regional integration arrangements (RIAs) on trade policy towards non-members in a three-good, three-country model. We explore under what conditions the formation of an RIA...

This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may worsen world welfare when free trade is not reached and customs unions (CUs) form. We consider a model of many countries. Article XXIV prevents a CU from raising its common external tariff, which makes...

In general, a reduction in trade barriers will affect the environment by expanding the scale of economic activity, by altering the composition of economic activity and by initiating a change in the techniques of production. We present empirical evidence to assess the relative magnitudes of these...

This paper explores the links between international trade theory and the practice of trade and industrial policy in open economies, with special attention to three areas where theoretical lessons have been misunderstood in policy debates. It argues that the ‘concertina rule’ for tariff...

How are the benefits - and costs - of a customs union divided between member countries? Outcomes depend on the comparative advantage of member countries, relative to each other and to the rest of the world. Countries with a comparative advantage between that of their partners and the rest of the...

This paper considers the location effects of geographically-discriminatory trade policy. A preferential move towards a customs union attracts industry to the integrating countries. When internal barriers fall below some critical level, input-output links between imperfectly competitive firms...

This paper studies the effect of switching from the destination to the origin principle of taxation on non-cooperative commodity tax equilibrium. When taxes are constrained to uniformity across commodities, the switch has no effect. When differentiated taxes are allowed, the effects of the...

We use 6-digit bilateral trade data to document the effect of WTO/GATT membership on the extensive and intensive product margins of trade. We construct gravity equations for the two product margins where the specifications of these gravity equations are motivated by the model of Eaton and Kortum...