A Deep Case for Shallow Integration / John Sturm Becko, Arnaud Costinot.

Format:

Book

Author/Creator:

Sturm Becko, John.

Contributor:

Costinot, Arnaud.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w35685.

NBER working paper series no. w35685

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2026.

Summary:

We study international cooperation in a general environment with pecuniary and non-pecuniary externalities across countries. We derive two main theorems, each demonstrating that market-access commitments, a form of shallow integration, are sufficient to implement globally efficient policies. When all cross-border externalities are pecuniary, the first theorem provides a new and unifying perspective on a series of results by Bagwell and Staiger. When some cross-border externalities are non-pecuniary, the second theorem shows that market-access commitments, properly extended, still sustain global efficiency. These extended market-access commitments reinterpret cross-border externalities as additional goods that are traded and priced at their social values. We discuss the implications for international cooperation on climate change and geopolitics.

Notes:

August 2026.

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