| Summary: | 碩士 === 國立中央大學 === 經濟學研究所 === 97 === We construct a three-country model to study how economic integration affects optimal tariffs and the welfare of member countries. We find that, if the firm outside of the integrating bloc is a monopolist and has constant marginal cost, two importing countries would face reduced aggregate welfare after they form a customs union. In addition, the welfare is decreasing with the severer variance of market size between two union countries. On the other hand, if the monopolist has increasing marginal cost, the formation of customs union would improve the aggregate welfare of member countries when their markets not differ too much. Moreover, if there exist firms in the member countries to make the market oligopolistic, the formation of the free trade area would induce trade expansion and improves welfare of both member and non-member countries. However, only when the difference of market size between two member countries is small, and the firm outside the bloc has weak competitive advantage on cost, then the welfare under customs union is higher than the level under free trade area and pre-integration circumstance.
|
|---|
