The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Regional and Preferential Trade Agreements

  • Pravin Krishna
Reference work entry


This article discusses analytical developments in the literature on the economics and politics of preferential trade agreements (PTAs). It describes results obtained in the traditional theory that demonstrate the ambiguous welfare outcomes of preferential trade liberalization. Theoretical approaches to designing necessarily welfare- improving PTAs are also discussed. Finally, this article sets out recent analyses in the literature concerning the dynamic expansion of trade blocs, the endogenous determination of policy (relating to preferences within a PTA and to extra-union trade), and the effects of preferential agreements on the multilateral trade system.


ASEAN free trade area (AFTA) Bargaining Coalitions Comparative advantage Customs unions European economic community (EEC) European free trade association (EFTA) Free trade areas General agreement on tariffs and trade (GATT) Great depression Income distribution International trade Meade, J. E. Mercosur Most-favoured-nation (MFN) principle Multilateral free trade Mundell, R. Natural trading partners hypothesis North American free trade agreement (NAFTA) Preferential trade agreements Redistribution of income Regional and preferential trade agreements Sunk costs Tariffs Terms of trade Trade creation Trade diversion Viner, J 

JEL Classifications

F1 F15 
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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Pravin Krishna
    • 1
  1. 1.