An efficiency loss that results from a RTA because less efficient member countries displace more efficient nonmember countries is known as:

Question

Quizplus · Accepted Answer

Trade diversion occurs when a less efficient member country within a regional trade agreement displaces a more efficient nonmember country, resulting in an efficiency loss. This is in contrast to trade creation, which occurs when member countries are able to expand their trade and increase efficiency due to the removal of trade barriers within the agreement. The other options listed are not directly related to the concept of trade diversion.

An Efficiency Loss That Results from a RTA Because Less