A Trade Coalition Analysis on East Asian Free Trade Agreement

Abstract

This study discusses the possibility of the East Asian Free Trade Area (EAFTA) through coalitional games. From the perspective of coalitional game, the grand coalition of ASEAN6, China, Japan and Korea under the EAFTA is in the core, which is stable as no winning coalition against it. The countries try to deal in the coalitions with the highest total welfares for all which finally come to the formation of {(ASEAN6, China), (ASEAN6, Korea), (ASEAN6, Japan)}. From the alternative coalition, it seems that the presence of ASEAN6 can be in any coalition and be a catalyst to the EAFTA.

Keywords: Trade coalition, coalitional game, EAFTA