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Measuring preferential market access

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  • Fugazza, Marco
  • Nicita, Alessandro

Abstract

One consequence of the proliferation of preferential trade agreements is that an increasing share of international trade is not subject to most favored nation tariffs, but rather enters markets through preferential access. The objective of this paper is to better investigate to what extent preferential market access affects bilateral trade. In doing so, the paper first provides two indices of market access conditions that take into account the complex structure of tariff preferences. One index summarizes direct market access conditions (the overall tariff faced by exports), while the other measures relative market access conditions (the overall tariff faced by exports relative to that faced by foreign competitors). Then, the paper explores the effects of preferential access on international trade by estimating a gravity model augmented by the two indices. The results indicate that both direct and relative market access conditions affect bilateral trade. Although a large majority of countries benefits from the system of preference because of improved direct market access, some countries see part of their benefits eroded, sometimes substantially, by the deterioration in their relative market access conditions.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38565.

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Date of creation: 08 Sep 2011
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Handle: RePEc:pra:mprapa:38565

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Keywords: Gravity Model; Trade policy; International Trade Flows; Tariffs;

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Cited by:
  1. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers, Sapienza University of Rome, DISS 2/13, Sapienza University of Rome, DISS.
  2. Cipollina, Maria & Laborde, David & Salvatici, Luca, 2013. "Do Preferential Trade Policies (Actually) Increase Exports? An analysis of EU trade policies," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 150177, Agricultural and Applied Economics Association.

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