Third-Country Effects On The Formation Of Free Trade Agreements

Yi, S., 1996. Endogenous formation of customs unions under imperfect competition: open regionalism is good. Journal of International Economics 41 (1-2), 153-177. Krishna, P., 2004. The economics of preferential trade agreements, in: Harrigan, J. (Ed.), Handbook of International Trade, Economic and Legal Analysis of Laws and Institutions, Basil Blackwell. Ornelas, E., 2005. Trade to create free trade zones and to undermine multilateralism. European Economic Review 49 (7), 1717-1735. Maskus, K., Nishioka, S., 2009.

Development distortions in terms of factor productivity and HOV business model. Canadian Journal of Economics 42 (2), 519-553. Magee, C., 2003. Endogenous preferential agreements: an empirical analysis. Contributions to economic analysis and policy 2 (1). Berkeley Electronic Press. Bagwell, K., Staiger, R., 2004. Multilateral trade negotiations, bilateral opportunism and GATT/WTO rules. Journal of International Economics 63 (1), 1-29. Furusawa, T., Konishi H., 2007. Freihandelsnetze. Journal of International Economics 72 (2), 310-335.

Goyal, S., Joshi, S., 2006. Bilateralism and free trade. International Economic Review 47 (3), 749-778. Friend, C., 2000. Different paths to free trade: the benefits of regionalism. Quarterly Economic Bulletin 115 (4), 1317-1341. Dutta B, Ghosal S, Ray D. Journal of Economic Theory 122 (2), 143-164. Bond, E., Syropoulos, C., 1996. The size of trading blocs: market power and global well-being effects. Journal of International Economics 40 (3-4), 411-437.

The recent proliferation of free trade agreements (FTA) has led to an increasingly complex network of privileged trade relationships. The economic literature has generally studied the formation of free trade agreements based on the economic characteristics of the participating countries. In this article, we show, both theoretically and empirically, that the choice of a free trade agreement also depends decisively on existing free trade agreements with third countries. Taking into account the interdependence of free trade agreements helps to explain an important part of free trade agreements that would otherwise not be predicted by the economic characteristics of countries. Egger, P., Larch, M., 2008. Interdependent preferential adherences to the trade agreement: an empirical analysis. Journal of International Economics 76 (2), 384-399. Aghion, P., Antras, P., Helpman, E., 2007. Verhandlungen ├╝ber Freihandel. Journal of International Economics 73 (1), 1-30. Bond, E., Riezman, R., Syropoulos, C., 2004.

A strategic analysis and the theory of the well-being of free trade zones. Journal of International Economics 64 (1), 1-27. Davis, D., Weinstein, D., 2001. A report on global trade in factors. American Economic Review 91 (5), 1423-1453. Krugman, S., 1991. Is bilateralism bad?, in: Helpman, E., Razin, A. (Eds.), International Trade and Trade Policy, MIT Press, Cambridge, MA, S. 9-23.

Baier S, Bergstrand J, Egger P. The new regionalism: the causes and consequences. International 109, 9-29. Ethier, W., 1998. Reciprocity, non-discrimination and a multilateral world. Mr. Mimeo. HOME PAGE: www.gwu.edu/~econ/faculty/joshi.html . .

Krishna, S., 1998. Regionalism and Multilateralism: an approach to political economy. Quarterly Economic Bulletin 113 (1), 227-251. Baldwin, R., 1999. A domino theory of regionalism, in: Bhagwati, J., Krishna, P., Panagariya, A. (Eds.), Trading Blocs: Alternatives Approaches to Analyzing Preferential Trading Agreements, MIT Press, Cambridge, MA, s. 479-502. We are very grateful to Dan Trefler and three anonymous referees for the valuable comments and suggestions that have greatly improved the document.