This paper analyses how the enlargement of a trade bloc will affect national welfare.
We establish a partial equilibrium model of a trade bloc either operating as a monopoly
with a competitive fringe or facing a duopolistic game in production taxes/subsidies.
Given this framework, we demonstrate how member countries’ welfare effects depend
on their trade flow and the market power of the trade bloc. A numerical estimation of
the effects of EU enlargement on the major grain crop markets suggests that welfare
effects are negligible. Economic reasons are therefore unlikely to be a motivating force
for further enlargement