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Two possible effects of a customs union

Two possible effects of a customs union

Comparison of trade creation, where purchasing switches from home production costing 100 dollars to a bloc partner costing 80 dollars, and trade diversion, where a tariff causes purchasing to switch from an outside producer costing 70 dollars to a bloc partner costing 80 dollars

A customs union removes tariffs between its members and applies a common external tariff to imports from non-members. These changes can produce either trade creation or trade diversion.

11.6.3 trade creation and trade diversion Lesson

  1. Intl A Level
  2. /Economics
  3. /11.6.3 trade creation and trade diversion

Step-by-step lessons on CIE Intl A Level Economics 11.6.3 trade creation and trade diversion. Each one builds up to exam-style questions.

Lessons