Abstract
In this article, it is found that the formation of free trade areas (FTAs) is typically welfare enhancing when the form of protection that is avoided by the FTA is a quota. This conclusion stands in contrast to the traditional finding that FTAs have ambiguous welfare effects in tariff-ridden economies. The unambiguous welfare gains of FTAs in the presence of quotas allow the argument to be made that in liberalization-protection policymaking conflicts, the pressure for liberalization may be manifested as pressure for FTAs.
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