This paper shows how distance may be used to coordinate on a unique equilibrium in which trade agreements are regional. Trade agreement formation is modeled as coalition formation. In a standard trade model with no distance between countries, a familiar problem of coordination failure arises...

In order to explain the price increase of non-traded goods in the face of trade and trade liberalization, this paper develops a simple model of non-traded goods with a tariff and analyzes how trade, trade policy, and changes within the non-traded sector influence the price of the non-traded...

In international trade literature, there is a common feature that the abolishment of barriers to trade leads to the expansion of trade flows. Most of the empirical studies aiming at simulation of welfare effects of trade liberalization explicitly make use of this direct tariff reduction - trade...