We develop a model of international trade with increasing returns to scale by taking into account the possibility of cooperation among agents in an egalitarian economy. It is shown that each country gains from trade in a trading world in which there are arbitrary numbers of...

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...