We assume an imperfectly competitive world with n commodities and address the question of whether or not (regional) trade blocs are viable. To answer this fundamental question, we use a notion of stability, offered by Greenberg (1990) , and show that regional trade blocs are not viable as they are not stable. On the other hand, we demonstrate that a global trade bloc is viable. Therefore, our results provide theoretical support for advocates of global free trade.
No takes yet. Share an insight, caveat, or question.
Oladi et al. (2007) studied this question.
Synapse has enriched 5 related papers. Consider them for comparative context: