Bilateral versus Multilateral Trade and Investment Liberalisation

Titelangaben

Egger, Peter ; Larch, Mario ; Pfaffermayr, Michael:
Bilateral versus Multilateral Trade and Investment Liberalisation.
In: The World Economy. Bd. 30 (2007) Heft 4 . - S. 567-596.
ISSN 1467-9701
DOI: 10.1111/j.1467-9701.2007.01005.x

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Abstract

To assess the welfare effects of bilateral versus multilateral trade and/or investment liberalisation in general equilibrium, we set up a three-country and three-factor knowledge-capital model of trade and multinational activity. Numerical simulation results indicate that multilateral liberalisation tends to dominate bilateral liberalisation in welfare terms. A transition economy tends to prefer bilateral over multilateral liberalisation to avoid plant relocation. For similar reasons, a developed country may prefer bilateral over multilateral liberalisation, if the other economies exhibit big relative factor endowment differences.