ABSTRACT
If all customs unions impose common tariff vectors of Kemp±Wan type then
¼ an incentive to form and enlarge customs unions persists until the world becomes one big customs union, that is, until world free trade prevails. More precisely, given any initial trading equilibrium, there exist ®nite sequences of steps, at each step new customs unions being created or old unions enlarged, such that at each step no individual is made worse off and such that after the last step the world is free trading. (Kemp and Wan, 1976: 96)
The Kemp±Wan common tariff is admittedly rather special. In particular, it relies on a degree of altruism on the part of member countries towards nonmember countries. However, the truth or falsity of the quoted proposition does not seem to depend on the preservation at each step of the wellbeing of non-member countries.
