customs unions (CUs) on member and non-member countries when tariffs of both members and non-members are endogenously … to lower tariffs on non-members relative to that under most favored nation (MFN). Design/methodology/approach – The paper … gain, their external tariff needs to be greater than this threshold but smaller than twice their MFN tariffs. Outside this …

reduces the potency of a country's optimal tariffs and therefore its incentive for unilaterally opting out of trade …

reduces the potency of a country’s optimal tariffs and therefore its incentive for unilaterally opting out of trade …