| Author: | Chang, W. Winters, L. A. |
| Title: | How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR |
| Journal: | American Economic Review
2002 : SEP, VOL. 92:4, p. 889-904 |
| Index terms: | PRICES TERMS OF TRADE BRAZIL GAMES |
| Language: | eng |
| Abstract: | The welfare effects of PTAs are most directly linked to changes in trade prices, i.e., the terms of trade. The paper employs a simple strategic pricing game in segmented markets to measure the effects of MERCOSUR on the pricing of "nonmember" exports to Brazil: As Brazil exempts its MERCOSUR partners from tariffs, the resulting competitive pressure leads other exporters to reduce their prices. Working with detailed data on unit values and tariffs the authors find that the creation of MERCOSUR was associated with significant declines in the prices of nonmembers' exports to the region. The paper provides a substantial list of references on this subject. |
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