Debordering the world of states: New spaces in international relations
In: New political science: official journal of the New Political Science Caucus with APSA, Band 18, Heft 1, S. 69-106
ISSN: 1469-9931
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In: New political science: official journal of the New Political Science Caucus with APSA, Band 18, Heft 1, S. 69-106
ISSN: 1469-9931
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Working paper
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This paper introduces a trade cost asymmetry into the Core-periphery model to investigate the location effects of protection. Trade costs arise from the active choice of governments. In the case of a country that can decide the level of barriers to imports without retaliation by the other country, unilateral protection is shown to attract firms and to increase the welfare of residents. Since all countries face a rational incentive to unilateral protection, noncooperative behaviour may lead to an inefficient equilibrium with too much protection.
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