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Customs unions and the core
Journal article   Peer reviewed

Customs unions and the core

Raymond Riezman
Journal of international economics, Vol.19(3), pp.355-365
11/01/1985
DOI: 10.1016/0022-1996(85)90042-X

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Abstract

Customs union formation is modeled as a two-stage game. In the first stage countries make coalitional choices according to core theory. In the second stage optimal tariffs are determined. This yields a theory that predicts which customs unions form. An example shows that a customs union can be an equilibrium even when both member countries do better at free trade.

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