PARTNERS TO A PREFERENTIAL TRADE AGREEMENT - IMPLICATIONS OF VARYING SIZE

Most often, the theory of preferential trade agreements assumes a ''sm all'' home country, and a ''large'' partner. In this paper, the welfar e implications of a small trading partner are examined. A distinction is found between two ranges of size: a country may be just ''small'', or be ''ultra-small''. Conventional propositions about the likelihood of a gain or a loss from entering into a preferential agreement would still hold when the partner is ''small''; whereas some of them would h ave to be reversed when the partner is an ''ultra-small'' economy. (C) 1998 Elsevier Science B.V. All rights reserved.