This paper explores a world in which regional trade agreements help reduce security tensions between neighbors.Regional integration agreements (RIAs) are examples of second best and have an ambiguous impact on welfare, contend Schiff and Winters.They build a model in which RIAs unambiguously...

Regional integration agreements are examples of second-best policies and have an ambiguous impact on welfare. This article builds a model in which regional integration agreements unambiguously raise welfare by correcting for externalities. It assumes that trade between neighboring countries...

We study the optimal trade policy against a foreign oligopoly withendogenous quality. We show that, under the Most Favoured Nation(MFN) clause, a uniform tariff policy is always welfare improvingover the free trade equilibrium. However, a nonuniform tariff policyis always desirable on welfare...