Using a three-country reciprocal dumping model, this paper analyses the effects
of tariff unions on welfare taking the possibility of production subsidies into
account. Production subsidies are found to prevent the deviation of trade. Results
are also obtained suggesting that although universal free trade is the most
efficient situation it is not an equilibrium situation, and that regional
liberalization will therefore not lead to universal free trade.
Keywords:
Economic Integration, Market structure and firms strategies, Regionalism and multilateralism
Méndez, J., & Méndez, L. (2016). Subsidios a la producción y efectos derivados de la formación de una unión aduanera. Estudios De Economía, 28(2), pp. 249–265. Retrieved from https://sintesisdejurisprudencia.uchile.cl/index.php/EDE/article/view/40811
