Enlargement of the European Union: A movement towards the optimal trade bloc size?

This paper analyses how the enlargement of a trade bloc will affect national welfare. We establish a partial equilibrium model of a trade bloc either operating as a monopoly with a competitive fringe or facing a duopolistic game in production taxes/subsidies. Given this framework, we demonstrate how member countries’ welfare effects depend on their trade flow and the market power of the trade bloc. A numerical estimation of the effects of EU enlargement on the major grain crop markets suggests that welfare effects are negligible. Economic reasons are therefore unlikely to be a motivating force for further enlargement.


Issue Date:
2009
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/58061
Published in:
Agricultural Economics Review, Volume 10, Issue 2
Page range:
79-88
Total Pages:
10
JEL Codes:
D42; F11; Q17; Q18




 Record created 2017-04-01, last modified 2017-08-25

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