Schiff, Maurice2012-03-192012-03-192010-05-01https://hdl.handle.net/10986/3783This paper provides a different basis than previous analyses for regional bloc formation and regional migration. Due to low bargaining power and fixed costs, small states face a severe disadvantage in negotiations with the rest of the world and might benefit by forming a regional bloc. The study a) presents a general equilibrium model where bargaining power, international and regional negotiation costs, number of issues negotiated, and accession rule to the bloc determine its size and welfare impact; and b) examines the impact of international migration as well as the migration-trade relationship. The main findings are: i) the likelihood of regional bloc formation, its size and welfare impact, increases with international negotiation costs and the number of issues negotiated, and decreases with regional negotiation costs; ii) bloc size is optimal (below the optimum) if an accession fee is (is not) charged; iii) South-South migration raises bloc size and welfare; iv) South-South migration and trade are complements under market access negotiations and are substitutes under negotiations for unilateral transfers as well as under migrant remittances; and v) South-North migration and bloc formation, and South-North and South-South migration, are substitutes for the states that benefit from membership in the bloc.CC BY 3.0 IGOBARGAINING POWERBENCHMARKBLOC MEMBERSBLOC SIZEBRAIN DRAINCAPITAL FLOWSCARIBBEAN REGIONCOLLECTIVE ACTIONCOMMODITY TRADECOMMON PROPERTYCONSTANT RETURNS TO SCALECONSTRAINTCONSUMER GOODSCOUNTRY OF ORIGINDEVELOPMENT ECONOMICSECONOMIC INTEGRATIONEQUILIBRIUMEQUILIBRIUM MODELEXCESS SUPPLYEXPORTSEXTERNALITYFIXED COSTSFOREIGN DIRECT INVESTMENTFREE ENTRYFREE TRADEFREE TRADE AGREEMENTSGDPGEOGRAPHIC PROXIMITYGEOGRAPHIC REGIONHOME COUNTRIESIMMIGRATIONIMPACT OF MIGRATIONINCOME SHARESINTERNATIONAL AGREEMENTSINTERNATIONAL ARENAINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL MIGRATIONINTERNATIONAL NEGOTIATIONINTERNATIONAL NEGOTIATIONSINTERNATIONAL ORGANIZATIONSINTERNATIONAL POSITIONSINTERNATIONAL TRADELABOR FORCELDCSM1M2MARGINAL BENEFITMARGINAL IMPACTMARKET ACCESSMARKET DISTORTIONSMARKET SHAREMEMBER COUNTRIESMEMBER STATEMEMBER STATESMIGRANTMIGRANTSMIGRATIONNATIONALSNATIONSNEGATIVE EXTERNALITYNEGOTIATIONNEGOTIATION COSTSNEGOTIATION RESOURCESOPPORTUNITY COSTPARTIAL EQUILIBRIUM ANALYSISPERFECT COMPETITIONPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOLITICAL ECONOMYPREFERENTIAL AGREEMENTSPREFERENTIAL TRADEPREFERENTIAL TRADE AGREEMENTSPROGRESSRECONSTRUCTIONREGIONAL AGREEMENTSREGIONAL BLOCREGIONAL BLOC FORMATIONREGIONAL BLOCSREGIONAL CONTRADICTIONSREGIONAL COOPERATIONREGIONAL COSTREGIONAL COSTSREGIONAL GROUPINGSREGIONAL INTEGRATIONREGIONAL MIGRATIONREGIONAL SOLUTIONSREGIONAL TRADEREGIONAL TRADE AGREEMENTREGIONAL WELFAREREGIONALISMREMITTANCESRESPECTTRADE AGREEMENTTRADE BARRIERSTRADE BLOCTRADE BLOCSTRADE EXPANSIONTRADE LIBERALIZATIONTRADE POLICYTRADE RELATIONSHIPTRADING PARTNERSTREATYVIRGINWAGE DIFFERENTIALSWAGESWARWELFARE IMPLICATIONSWTOWorld Bank10.1596/1813-9450-5297