in st itu te 2012 / 01 Hub - and - spoke free trade areas : Theory and evidence from Israel by George Deltas , Klaus Desmet , Giovanni Facchini January 2012
نویسندگان
چکیده
We study how the sequential formation of free trade areas affects trade flows between member countries. In a three–country, three–good model of comparative advantage if two countries have an FTA, and both sign a similar agreement with the third, trade between the two decreases. However, if only one of them signs an additional FTA, a huband-spoke pattern arises, and trade between the initial members increases. Israel’s experience lends strong support to our model: trade between Israel and the EU, subject to an FTA since 1975, increased by an additional 29% after the introduction of the US-Israel FTA in 1985. JEL Classification: F11, F13.
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Hub-and-spoke Free Trade Areas
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