Customs unions constitute agreements to engage in free intra-union trade and to levy common external tariffs on trade with nonmembers. Existing theoretical models do not agree on how the common external tariffs are chosen. In this paper, a model of customs union formation is developed in which...

This paper investigates how customs union members select the common external tariff (CET) to levy on imports from nonmembers. A perfectly competitive, pure exchange, general-equilibrium model of world trade is simulated. Contrary to most previous work, countries have the freedom to share...

We analyze the effect of heterogeneity of foreign and domestic producers on product standard and investigate whether the standard chosen by the welfare-maximizing policymaker is protectionist. In a partial-equilibrium set-up, both domestic and foreign producers compete in selling a product in...