ABSTRACT
All types of international economic integration provoke interest because they, both promote and restrict trade at the same time. Trade is liberalized, at least partly, among the participating countries, while it is also distorted with third countries as there are various barriers between the integrated group and the rest of the world. On those grounds the analysis of international economic integration is delicate, complex and speculative. A customs union is the type of integration that has received the most attention in research and is the most rigorously developed branch of the neo-classical theory. This chapter is limited to an analysis of the basics of the static and dynamic models of customs unions.
