Bulletin n. 1/2015 | ||
June 2015 | ||
Cheong Juyoung, Kwak Do Won, Tang Kam Ki |
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Can Trade Agreements Curtail Trade Creation and Prevent Trade Diversion? | ||
in Review of International Economics , Volume 23, Issue 2, May 2015 , 2015 , 221-238 | ||
This paper investigates how pre-existing preferential trade agreements (PTAs) dilute the trade creation effect and shield the trade diversion effect of new PTAs. Countries having pre-existing PTAs enjoy smaller gains in intra-bloc trade because of the dilution effect and experience smaller losses or even gains in extra-bloc trade because of the shielding effect. The findings support the proposition that PTAs could be used to fend off future trade diversion. | ||