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Trade in the Triad: how easy is the access to large markets?

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  • Lionel Fontagné

    (Maison des Sciences Economiques)

  • Thierry Mayer
  • Soledad Zignago

    (Centre d'Etudes Prospectives et d'Informations Internationales)

Abstract

In this paper, we measure market access between the United States, the EU, and Japan (the Triad), using the effect of national borders on trade patterns. We investigate overall and industry-level trends of bilateral trade openness and provide explanations for those using proxies for bilateral observed protection (tariffs and NTBs), home bias of consumers, product differentiation, and levels of FDI. The explanations related to actual protection, home bias and substitutability of goods put together explain a large part of the border effect between blocs of the Triad, although they do not explain the whole of the border effect puzzle.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/10189.

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Date of creation: Nov 2005
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Publication status: Published in Canadian Journal of Economics, 2005, vol. 38, pp.1401-1430
Handle: RePEc:spo:wpmain:info:hdl:2441/10189

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  1. Scott Bradford, 2003. "Paying the Price: Final Goods Protection in OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 24-37, February.
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  16. Lionel Fontagné & Friedrich von Kirchbach & Mondher Mimouni, 2001. "A First Assessment of Environment-Related Trade Barriers," Working Papers 2001-10, CEPII research center.
  17. Huiwen Lai & Daniel Trefler, 2002. "The Gains from Trade with Monopolistic Competition: Specification, Estimation, and Mis-Specification," NBER Working Papers 9169, National Bureau of Economic Research, Inc.
  18. Carolyn L. Evans, 2003. "The Economic Significance of National Border Effects," American Economic Review, American Economic Association, vol. 93(4), pages 1291-1312, September.
  19. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc.
  20. Jon D. Haveman & Usha Nair-Reichert & Jerry G. Thursby, 2003. "How Effective are Trade Barriers? An Empirical Analysis of Trade Reduction, Diversion, and Compression," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 480-485, May.
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