We show that the Kemp-Wan proposition concerning the formation of customs union holds under conditions of imperfect competition and increasing returns.

We present a simple two(-country) by two(-good) differental game model of international trade in which the governments of the two countries play a tariff-setting game. We explicitly derive a unilateral optimum tarifff rate and then a Markov-perfect equilibrium pair of tariff strategies...

The Frankel-Romer-Lucas theory of endogenous growth rests on the assumption of knowledge-based externalities and price-taking representative households. It is argued that, in a context of long-run growth, these assumptions are mutually incompatible (that representative households will co-operate...

In the present note we construct an overlapping-generations (OLG) example in which free trade is Pareto-improving and the world equilibrium chaotic. The example is simple, but it is not incompatible with the general model of Kemp and Wolik.

The conclusions of the 1976 Kemp-Wan proposition are shown to be substantially valid even if all tariff vectors, both pre-union and post-union, are optimally chosen.