The Research Of Welfare Effect On Customs Union Angled On Economy Of Scale

As a significant phase of regional economy integration, CU(Custom Union Substantially abolishes all tariff barriers and other restrictions to trade between member states, although CU doesn't realize the maximum welfare, it does enhance the welfare level of the whole Custom Union area.The constant of scale return conditions the past welfare effect theory of Custom Union. A fact that CU makes all member states to form a huge market with more efficient and competitive economic environment, and this characteristic becomes more and more evident after emergence of economy of scale. This paper researches the welfare effect of Custom Union, substantially basing on this characteristic and angled on the scale of economy.Firstly, analyses the welfare effect theory of Custom Union within overseas and domestic and then defines the paper's research angle and objective. Next, states the paper from four aspects angled on the scale of economy deeply and further. The second chapter introduces two-country model and discusses the theoretical proof of the welfare effect on Customs Union angled on economy of scale. It emphasizes the conflicts and benefits of welfare effect, the definition of the welfare effect point and makes a trial study to the action of the government, which define the welfare effect point. It introduces linear trade model and three-country model to deepen the theory proof. The third chapter offers research method of welfare effect of Custom Union angled on the scale of economy and applies the knowledge of the calculus of fluxion, the three dimensions geometric model, general equilibrium analysis based on the Nash-equilibrium analysis and sub-game perfection equilibrium analysis. The forth chapter draws a few important conclusions of welfare effect of Custom Union angled on the scale of economy by summarizing the above theoretical proof and research method. They are that the trade equilibrium of the Custom Union has multiple results and the welfare effect of Custom Union has two benefits area and one conflict area within two-country model. But, the welfare effect of Custom Union has many possible distributions within the three-country model and multiple- country model. The fifth chapter makes an empirical analysis to the welfare effect of England and France in Europe Union. It tests the rights of the two-country model's theoretical proof and the effectiveness of the two conclusions that one is the trade equilibrium of the Custom Union has multiple results and another is the welfare effect of Custom Union has two benefits area and one conflict area within two-country model. Otherwise, it forecasts the...