On The Advantages of Piecemeal Integration

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On The Advantages of Piecemeal Integration

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dc.contributor.author Hansen, Bodil O. en_US
dc.contributor.author Keiding, Hans en_US
dc.date.accessioned 2009-02-04T10:27:33Z
dc.date.available 2009-02-04T10:27:33Z
dc.date.issued 2005-05-04T00:00:00Z en_US
dc.identifier.uri http://hdl.handle.net/10398/7495
dc.description.abstract For the study of economic integration, it is costumary to use a three countryworld, where two of the countries may introduce forms of closer economic cooperation. In the present model, we follow this tradition but put special emphasis on the role of credit and entrepreneurship. Our model is of the standard neoclassical type, with the addition that production takes time and is subject to uncertainty. Also, firms must use the financial system in order to buy inputs; the cost of credit may differ among countries and industries, reflecting their basic patterns of uncertainty. Following the Newbery-Stiglitz approach, we show that in such model we may exhibit cases of Pareto inferior trade and, in particular, Pareto inferior economic integration. More specifically, we show that integrating countries of very different economic size may give rise to adverse effects on welfare, whereas integration of countries with a more similar economic structure and size tends to have beneficial effects for the parties. Keywords: trade, uncertainty, Pareto inferior trade, regional integration. JEL classification: F11, F15, F34 en_US
dc.format.extent 19 s. en_US
dc.language eng en_US
dc.relation.ispartofseries Working paper;2005-004 en_US
dc.title On The Advantages of Piecemeal Integration en_US
dc.type wp en_US
dc.accessionstatus modt05maj04 miel en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for Nationaløkonomi en_US
dc.contributor.departmentshort en_US
dc.contributor.departmentuk Department of Economics en_US
dc.contributor.departmentukshort ECO en_US
dc.idnumber x656467672 en_US
dc.publisher.city København en_US
dc.publisher.year 2005 en_US
dc.title.subtitle A model of trade with several countries where local integration benefits all en_US


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