RT Generic
T1 Hub-and-Spoke Free Trade Areas
A1 Deltas, George
A1 Desmet, Klaus
A1 Facchini, Giovanni
A2 CEPR, 
AB This paper analyzes how the sequential formation of free trade areas affects the volume of trade between member countries. In a three--country, three--good model, if two countries have a free trade area, and both sign a similar agreement with the third, trade between the two decreases, and welfare rises in both. However, if only one of them signs an FTA with the third, a hub-and-spoke pattern arises. If the two spokes have a comparative advantage in different goods, trade between the two countries in the initial FTA increases, with welfare rising in the hub and falling in the spoke. We provide evidence consistent with the theoretical model when studying the experience of Israel.
YR 2006
FD 2006-11
LK https://hdl.handle.net/10016/4807
UL https://hdl.handle.net/10016/4807
LA eng
NO This paper is an output of the Research Training Network 'Trade,Industrialisation and Development' (Contract No. HPRN-CT-2002-00236)funded through the Improving Human Potential activity of the EuropeanCommission's Fifth Framework Programme
NO Financial aid from the Spanish Ministerio de Educación yCiencia (SEJ2005-05831) and the Fundación Ramón Areces is gratefullyacknowledged
DS e-Archivo
RD 17 jul. 2024