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Trade-Diverting Free Trade Agreements, External Tariffs, and Feasibility
2013
Social Science Research Network
There has been a proliferation of preferential trade agreements within the last two decades. This paper analyzes the e¤ects of free trade agreements (FTAs) on external tari¤s in small economies where protection decisions are made politically. It extends the Grossman and Helpman (1995) model by determining tari¤ rates endogenously instead of assuming they are ...xed during or after the formation of FTAs. We show that when an FTA is established, the tari¤ rates that apply to non-members
doi:10.2139/ssrn.2372226
fatcat:ontp262b6jcsxbjfzncaaohj6u