Market Access and Welfare Effects of Free Trade Areas without Rules of Origin / Jiandong Ju, Kala Krishna.

Format:

Book

Author/Creator:

Ju, Jiandong.

Contributor:

National Bureau of Economic Research.

Krishna, Kala.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5480.

NBER working paper series no. w5480

Language:

English

Subjects (All):

International economic integration.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Cambridge, Mass. : National Bureau of Economic Research, 1996.

Summary:

The market access and welfare effects of Free Trade Areas (FTAs) without Rules of Origin (ROOs) are studied. We consider both the final and intermediate goods markets and their interlinkage. The FTA weakly reduces all tariffs and prices within the FTA. This raises quantity demanded and reduces quantity supplied for both the final and intermediate goods, thereby raising imports. This is the classic trade creation effect and is welfare improving. We identify two additional effects which work in the opposite direction and identify conditions under which these welfare reducing, import reducing effects dominate.

Notes:

Print version record

March 1996.