Export Subsidies and Customs Unions
Jose Mendez-Naya, Tomas Gomez-Arias
This paper explores how the formation of customs unions affects the argument for export subsidies in imperfectly competitive international markets. It is shown that the existence of customs unions may eliminate the incentive for their members to subsidize exports as customs unions grow larger. Therefore, it can be affirmed that regionalism and multilateralism are complementary processes.