The purpose of this paper is to analyse the political economy of preferential trade agreements based on a sequential non-cooperative Stackelberg political game between a large economy and a small one, in which the political dispute of rival lobby groups defines the unilateral stance of both governments in the first stage; and the Stackelberg "coalition-proof" equilibrium defines the free trade agreement format in the second stage. Finally, a few modifications in the initial game structure are discussed in order to enhance the small economy's negotiation power. The political economy model is applied to FTAA case.
CITATION STYLE
Motta, D. A. (2007). Political economy of preferential trade agreement: The case of bilateral asymmetric negotiation. Revista de Economia Politica, 27(2), 193–208. https://doi.org/10.1590/s0101-31572007000200003
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