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...

This paper examines the welfare effects of the formation of a free-trade area (a set of countries that abolish tariffs among member countries but let individual member countries to set external tariffs). If a representative consumer has love-of-variety preferences, the welfare function exhibits...

The main purpose of this note is to establish a precise version of the proposition that, in the context of a worldwide constituency, a customs union is more beneficial or less harmful than a comparable but distinct free trade association. It is shown that, corresponding to each feasible...

The gravity model is one of the most successful empirical models in economics to evaluate the effects of several factors on international trade or bilateral trade flows. Many factors that are related to trade barriers can influence the bilateral trade between two countries. Regional trade...