We investigate the effects of free trade agreements (FTAs) on tariffs and welfare in vertical trade. We consider a three-country model, where an FTA is formed between a country exporting a final good and a country exporting an intermediate good. The FTA unambiguously leads to a reduction in the...

This note examines strategic import policies in a three-country model with vertical production and trade relationship. Reflecting horizontal and vertical effects of the import policy, each country's optimal policy can be either tariff or subsidy, depending on the relative numbers of upstream and...

This note examines strategic import policies in a three-country model with vertical production and trade relationship. Reflecting horizontal and vertical effects of the import policy, each country's optimal policy can be either tariff or subsidy, depending on the relative numbers of upstream and...