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On the Pro-competitive Effects of Regional Trading Agreements

Author

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  • Viaene Jean-Marie

    (Erasmus University Rotterdam)

  • Moraga-González José L.

    (VU University Amsterdam and University of Groningen)

Abstract

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 Favored Nation (MFN) clause because, besides extracting rents from foreign firms, they foster competition in the market. Regional Trading Agreements (RTAs), which favor members relative to non-members, are examples of such nonuniform tariff policies.

Suggested Citation

  • Viaene Jean-Marie & Moraga-González José L., 2013. "On the Pro-competitive Effects of Regional Trading Agreements," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 1(1), pages 5-22, July.
    • Handle: RePEc:vrs:auseab:v:1:y:2013:i:1:p:5-22:n:1
    DOI: 10.2478/auseb-2014-0001
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    References listed on IDEAS

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