This paper proves theoretically that bilateral trade between South and North Korea, between whom many political barriers to trade exist, is Pareto‐inefficient, and that a Pareto‐efficient situation can be achieved through the attainment of institutional economic integration, enabled by mutual agreement between South and North Korea. Based on our theoretical analysis, we propose a comprehensive economic integration agreement as an instrumental framework for the gradual integration of South and North Korea. In addition, we analyze the economic impacts of such integration. We estimate that gradual integration would positively affect North Korean GDP, increasing it by 3.55–4.88 percent from the baseline, depending on the various scenarios we analyze.

中文翻译：

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南北朝鲜的制度经济一体化及其对经济的影响

本文从理论上证明，存在许多政治性贸易壁垒的南北朝鲜之间的双边贸易是帕累托低效率的，而且通过双方之间相互达成协议，实现体制经济一体化可以实现帕累托有效的局面。韩国和朝鲜。根据我们的理论分析，我们提出了一项全面的经济一体化协议，作为南朝鲜和朝鲜逐步一体化的工具框架。此外，我们分析了这种整合的经济影响。我们估计，逐步整合将对朝鲜的GDP产生积极影响，根据我们分析的各种情况，它将使朝鲜的GDP比基准增加3.55-4.88％。