Free-Trade Areas and Contingent Protection between Competing Exporters

Posted: 4 Feb 2019

See all articles by Belayneh Kassa Anagaw

Belayneh Kassa Anagaw

KDI School of Public Policy and Management

Chrysostomos Tabakis

KDI School of Public Policy and Management

Date Written: December 6, 2018

Abstract

This paper investigates the impact of free-trade areas (FTAs) on the use of contingent protection between competing exporters. We develop a dynamic model similar to the competing-importers one of Tabakis (2015), in which countries are limited to self-enforcing cooperative multilateral trade agreements and the economic environment is characterized by trade-flow volatility. Our analysis demonstrates that the findings of Tabakis (2015) extend to our competing-exporters case. In particular, the parallel formation of different FTAs results in a gradual but permanent easing of multilateral trade tensions, especially as far as contingent protection is concerned. Thus, our results highlight a building-block effect of FTAs on multilateral trade cooperation.

Suggested Citation

Anagaw, Belayneh Kassa and Tabakis, Chrysostomos, Free-Trade Areas and Contingent Protection between Competing Exporters (December 6, 2018). KDI School of Pub Policy & Management Paper No. 18-13 (December, 2018), Available at SSRN: https://ssrn.com/abstract=3325679 or http://dx.doi.org/10.2139/ssrn.3325679

Belayneh Kassa Anagaw

KDI School of Public Policy and Management ( email )

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

Chrysostomos Tabakis (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

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