This study considers endogenous determination of domestic standards on products that cause negative consumption externalities in the presence of a preferential trade agreement (PTA) in a three-country world. In particular, we examine how a PTA affects the optimal levels of external tariffs and...

We analyze the impact of globalization on the incentive to strengthen regional integration. In a simple three-country oligopolistic trade model, we demonstrate that increased external competitive pressure may induce governments, influenced by producer interests, to lower intra-regional trade...