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Egger, Peter ; Larch, Mario:
Interdependent Preferential Trade Agreement Memberships: An Empirical Analysis.
In: Journal of International Economics.
Bd. 76
(2008)
Heft 2
.
- S. 384-399.
ISSN 0022-1996
DOI: https://doi.org/10.1016/j.jinteco.2008.08.003
Abstract
The establishment of a new preferential trade agreement (PTA) or the expansion of an existing one alters the incentives of non-members to participate in a PTA. This can lead to a domino effect whereby non-members join an existing PTA. Or it can lead a pair of countries to establish a new PTA. We examine the determinants of why a pair of countries enters a bilateral PTA. Our emphasis is on (a) the impact of pre-existing PTAs and (b) whether this impact is larger when the members of pre-existing PTAs are on average geographically close to the pair of countries. Using data for 145 countries during 1955–2005, we find evidence that pre-existing PTAs increase the probability that a country-pair will enter a bilateral PTA and that this effect diminishes with distance. The analysis makes use of techniques drawn from spatial econometrics.