This paper constructs a simplified framework for analyzing the welfare effects of free trade areas. We provide an alternative proof of the Panagariya-Krishna proposition on free trade areas, shortening the proof, covering a broader set of circumstances, and showing that the necessary income...

This paper constructs a framework for analysing the welfare effects of free trade areas. We provide an alternative verification of the Panagariya-Krishna proposition on free trade areas, shortening the proof, covering a broader set of circumstances, and showing the necessary income flows to...

We investigate the limits of a mechanism for free trade area (FTA) formation that simultaneously satisfies internal industrialization targets. For arbitrary targets, we find necessary and sufficient conditions that guarantee that the mechanism is efficient for member countries individually, even...

In this paper we construct a mechanism where any group of nations can form a welfare enhancing free trade area and, at the same time, satisfy their industrialization targets efficiently. The mechanism does not rely on cross-country transfers and, therefore, allows each member country to reap...