On the Optimal Size and Composition of Customs Unions: An Evolutionary Approach

Abstract Customs unions enable countries to freely access each other’s markets, which is thought increase intra-regional trade and economic growth. However, accession a customs union also comes with the condition that all members need consent common external policy. Especially if feature different structures, this may act as force against creation of large unions. In paper, we propose new mathematical approach model optimal size composition in form bi-objective combinatorial non-linear problem. We use multi-objective evolutionary algorithm (NSGA-II) search for best (non-dominated) configurations using data on flows characteristics 200 countries. Our identifies 445 are strictly preferable, from global perspective, real-world landscape many these non-dominated have they improve outcomes world whole, average, but not individual The tend favour few several smaller ones.