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On the Pro-competitive Effects of Regional Trading Agreements

Author:
Jose L. Moraga-Gonzalez   Jean-Marie Viaene  


Issue Date:
2013


Abstract(summary):

We explore the pro-competitive effects of trade policies in a model where a competitive fringe of domestic firms compete with a foreign duopoly exporting vertically differentiated goods. We show that discriminatory nonuniform tariff policies are preferred over the Most Fa- vored Nation (MFN) clause because, besides extracting rents from foreign firms, they foster competition in the market. Regional Trading Agree- ments (RTAs), which favor members relative to non-members, are exam- ples of such nonuniform tariff policies.


Page:
18


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