Political economy of preferential trade agreement: the case of bilateral asymmetric negotiation

the purpose of this paper is to analyse the political economy of preferential trade agreements based on a sequential non-cooperative stackelberg political game between a large economy and a small one, in which the political dispute of rival lobby groups defines the unilateral stance of both governments in the first stage; and the stackelberg "coalition-proof" equilibrium defines the free trade agreement format in the second stage. finally, a few modifications in the initial game structure are discussed in order to enhance the small economy's negotiation power. the political economy model is applied to ftaa case.