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Necessarily Welfare-Enhancing Customs Unions with Industrialization constraints: A proof of the Cooper-Massell-Johnson-Bhagwati Conjecture

Krishna, Pravin; Bhagwati, Jagdish N.

"The conventional 'static', 'benign government' theory of customs unions was pioneered by
Jacob Viner's (1950) pathbreaking work2
. He essentially argued, counterintuitively to those who
thought that even preferential tariff cuts would necessarily be welfare-improving, that a subset
of countries reducing tariffs on one another to zero would not necessarily be improving their
own, or world welfare. In short, such Free Trade Areas or Customs Unions (with common
external tariffs) could be trade-diverting and harmful or trade-creating and beneficial."

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Academic Units
Economics
Publisher
Department of Economics, Columbia University
Series
Department of Economics Discussion Papers, 694
Published Here
February 28, 2011

Notes

April 1994.

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