475. Who Gains the Most in Preferential Trade Agreements?

Juyoung Cheong and Shino Takayama, School of Economics Discussion Paper No. 475 January 2013, School of Economics, The University of Queensland. Australia.

Full text available as:
PDF - Requires Adobe Acrobat Reader or other PDF viewer.

Abstract

Using recent extensive data of bilateral trade in manufacturing, we study the relations between trade flows, each country’s technological levels, and geographic barriers. Then, we calibrate the equilibrium of a general equilibrium model to explore how a Trans-Pacific Partnership affects each country’s welfare and trade flows. We decompose the total change of trade flows from member countries into income effects and substitution effects, and investigate the factors that affect trade flows. We demonstrate that a positive coalition externality could exist in that some nonmember countries could gain more than member countries and further investigate under which circumstances it arises.