The big picture issue this paper intends to address is on the incentive aspects
of a multilateral trade liberalization. The paper builds on a framework originally
introduced in Grossman and Helpman's The Politics of Free-Trade Agreements
(1995). The aim of that work was to explain the viability of free trade agreements
(FTAs) between two countries in a political-economy framework. A simple extension
to a three-country setting allows us to analyze whether FTAs are "building
blocs" or "stumblirig blocs." An illustration with specific functional forms serves to
find conditions under which FTAs are, somehow, partial building blocs, i.e., a bilateral liberalization
can be feasible when multilateral liberalization is not.
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