3 × 3 theory of customs unions

Abstract

Four recent models (those of Berglas, Corden, Meade and Riezman) which have extended the theory of customs union to 3 × 3 dimensions are reviewed. The reasons for both apparent and real differences among the welfare propositions from these models are explained. Some new extensions are derived. The main conclusions are that the family of 3 × 3 models introduce several effects which cannot be present in 3 × 2 models and that the distinctions among the models are due mostly to diverse assumptions concerning the trilateral pattern of trade which are not readily apparent. © 1982.