Analysis on the Relationship between Overlapping Free Trade Area and Multilateral Trade Agreement

Xinxuan Cheng, Ying Wang, Hong Tu

Abstract


The overlapping free trade area (FTA), as one prominent phenomenon in the development of FTA after the 1990s, has influenced the multilateral trade system (MTS) greatly. This article has proved that the special advantages of spoke countries can bring about cohesive effect on the industries through adopting the analytical method of infinitely repeated game, and the spoke countries will face a discriminatory treatment, resulting in decentralization effect. The overlapping free trade agreement has the feature of self-execution, and compared with the traditional FTA, it is more likely to meet the conditions of incentive compatibility constraint with MTS.

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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