Asymmetric free trade agreements

Vi Cao; Haifeng Fu; X. Henry Wang

doi:10.1016/j.econlet.2025.112267

Asymmetric free trade agreements

Vi Cao, Haifeng Fu^*, X. Henry Wang

^*Corresponding author for this work

Department of Economics

University of Missouri

Research output: Contribution to journal › Article › peer-review

Abstract

This paper studies endogenous coalition formation among two North countries and two South countries. A North country is characterized by a larger market size and a lower unit cost of production compared to a South country. We identify the conditions under which two asymmetric free trade agreements (FTAs), each formed between a North country and a South country, can emerge as equilibrium. Such equilibria, previously not documented in the literature, may have practical implications.

Original language	English
Article number	112267
Journal	Economics Letters
Volume	250
DOIs	https://doi.org/10.1016/j.econlet.2025.112267
Publication status	Published - Apr 2025

Keywords

Coalition formation game
Free trade agreement
Strong Nash equilibrium
Tariff game

Access to Document

10.1016/j.econlet.2025.112267

Cite this

@article{f8ebd27ced44488a998a1aa67a9d0399,

title = "Asymmetric free trade agreements",

abstract = "This paper studies endogenous coalition formation among two North countries and two South countries. A North country is characterized by a larger market size and a lower unit cost of production compared to a South country. We identify the conditions under which two asymmetric free trade agreements (FTAs), each formed between a North country and a South country, can emerge as equilibrium. Such equilibria, previously not documented in the literature, may have practical implications.",

keywords = "Coalition formation game, Free trade agreement, Strong Nash equilibrium, Tariff game",

author = "Vi Cao and Haifeng Fu and Wang, {X. Henry}",

note = "Publisher Copyright: {\textcopyright} 2025",

year = "2025",

month = apr,

doi = "10.1016/j.econlet.2025.112267",

language = "English",

volume = "250",

journal = "Economics Letters",

issn = "0165-1765",

}

TY - JOUR

T1 - Asymmetric free trade agreements

AU - Cao, Vi

AU - Fu, Haifeng

AU - Wang, X. Henry

PY - 2025/4

Y1 - 2025/4

N2 - This paper studies endogenous coalition formation among two North countries and two South countries. A North country is characterized by a larger market size and a lower unit cost of production compared to a South country. We identify the conditions under which two asymmetric free trade agreements (FTAs), each formed between a North country and a South country, can emerge as equilibrium. Such equilibria, previously not documented in the literature, may have practical implications.

AB - This paper studies endogenous coalition formation among two North countries and two South countries. A North country is characterized by a larger market size and a lower unit cost of production compared to a South country. We identify the conditions under which two asymmetric free trade agreements (FTAs), each formed between a North country and a South country, can emerge as equilibrium. Such equilibria, previously not documented in the literature, may have practical implications.

KW - Coalition formation game

KW - Free trade agreement

KW - Strong Nash equilibrium

KW - Tariff game

UR - http://www.scopus.com/inward/record.url?scp=105000136855&partnerID=8YFLogxK

U2 - 10.1016/j.econlet.2025.112267

DO - 10.1016/j.econlet.2025.112267

M3 - Article

AN - SCOPUS:105000136855

SN - 0165-1765

VL - 250

JO - Economics Letters

JF - Economics Letters

M1 - 112267

ER -

Asymmetric free trade agreements

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this