We show that multilateral tariff binding liberalization substantially impacts the nature and extent of Preferential Trade Agreement (PTA) formation. First, it shapes the nature of forces constraining expansion of Free Trade Agreements (FTAs). The constraining force is a free riding incentive of...

In the paper, we show how the potential signaling properties of trade agreements can explain two notable features of the international trading system. First, many trade agreements involve gradual, rather than immediate, reduction of trade barriers. We demonstrate how gradualism can serve as a...