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This paper provides a case study of the impact of the Canada-US border on regional trade patterns. Although the choice of this particular case was dictated by a data source that could be unique to Canada, the Canada-US case may be particularly interesting because the two countries are so similar in terms of culture, language, and institutions. The methodology of the paper is very simple and derives from a literature including studies by Jan Tinbergen (1962), Hans Linneman (1966), Jeffrey Frankel (1993), and others. This paper makes use of a Statistics Canada data set that includes both interprovincial trade flows and flows between each Canadian province and each state of the US. The remainder of the paper is organized as follows. Section I presents the basic results using the simplest specification. Section II presents a sensitivity analysis that focuses on specification issues and econometric questions relating to heteroscedasticity and a possible simultaneity problem.

Suppose that an opportunity arises for two countries to negotiate a free-trade agreement (FTA). Will an FTA between these countries be politically viable? And if so, what form will it take? We address these questions using a political-economy framework that emphasizes the interaction between industry special-interest groups and an incumbent government. We describe the economic conditions necessary for an FTA to be an equilibrium outcome, both for the case when the agreement must cover all bilateral trade and for the case when a few politically sensitive sectors can be excluded from the agreement.

This paper demonstrates that bilateral free-trade agreements can undermine political support for further multilateral trade liberalization. If a bilateral trade agreement offers disproportionately large gains to key agents in a country, then their reservation utility is raised above the multilateral free-trade level, and a multilateral agreement would be blocked. Bilateral agreements between countries with similar factor endowments are most likely to have this effect. It also follows that bilateral free-trade agreements can never increase political support for multilateral free trade.

In trade liberalization between a large country and a small one, if production requires irreversible investments, anticipated negotiations may make the small country strictly worse off than a fully anticipated trade war, and indeed worse off than autarchy. The reason is that investors, anticipating liberal trade, will invest in the export sector, making the small country dependent on trade with the large one and thus ruining its bargaining power. This effect is dominated by conventional effects, so that anticipated bargaining benefits the small country on balance, if there is sufficient: (i) dissimilarity between the economies, and (ii) substitutability between goods.

The article quantifies the impact of cheap grain on the European economy in the late nineteenth century. Falling transport costs led to dramatic declines in Anglo-American grain price gaps, but price convergence was less impressive between the U.S. and other European economies, and within Europe. Cheaper grain meant lower rents throughout Europe, and protection boosted rents, but the magnitudes involved differed between countries. Similarly, cheap grain increased real wages in Britain, but lowered them elsewhere. The grain invasion implied different shocks across countries, and this partly explains the varying trade policies pursued in Europe during this period.

The theory of preferential trade agreements, or what might be described in policy terms as the General Agreement on Tariffs and Trade Article XXIV sanctioned free trade areas and Customs Unions, has undergone 2 phases of evolution, in 2 very different modes, largely reflecting the contrasting policy concerns of the time. This evolution is traced, offering both a historical context and an intellectual coherence to diverse analytical approaches. It is concluded that among the as-yet-unformalized arguments that drive the simultaneous use of PTAs by the US alongside multilateralism is that produced by Bhagwati (1994) who posits a selfish hegemon that, while wedded to multilateral outcomes, uses the PTA approach as a sequential bargaining strategy to divide the nonhegemonic governments and improve the final multilateral outcome in favor of its own demands.

Vietnam has rapidly become one of the three largest rice exporters in the world, in spite of a binding export quota. This article uses a multimarket spatial-equilibrium model to examine the effect of further liberalization on regional rice prices. Household data are then used to calculate the welfare impact of these price changes on different household groups. The results suggest that although rice export liberalization would raise food prices and exacerbate regional inequality, it would also increase average real income and reduce (slightly) the incidence and severity of poverty. We explore several explanations of these apparently paradoxical results.