Trade Diverion and Declinning Tariffs: Evidence from MERCOSUR

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Trade Diverion and Declinning Tariffs: Evidence from MERCOSUR

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Pabo Sanguinetti ()
Alok Bohara
Kishore Guatanabe

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Pablo Sanguinetti

Abstract

This paper empirically examines the alternative posed by Richardson (1993) to the traditional view that trade integration may exacerbate inefficiencies. Richardson’s hypothesis boldly predicts that trade diversion (and trade creation) may actually cause tariffs to decline! The hypothesis is fundamentally attributable to the presence of a political component in the governments’ objective functions. A cross-sectionally rich data set on trade and tariffs from the Mercosur-pact countries, primarily Argentina, is used. The evidence yields surprising conclusions about the validity of endogenous tariff determination in models of trade integration.

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Paper provided by Universidad Torcuato Di Tella in its series Department of Economics Working Papers with number 003.

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Length: 35 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:udt:wpecon:003

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Article
- Bohara, Alok K. & Gawande, Kishore & Sanguinetti, Pablo, 2004. "Trade diversion and declining tariffs: evidence from Mercosur," Journal of International Economics, Elsevier, vol. 64(1), pages 65-88, October. [Downloadable!] (restricted)

This paper has been announced in the following NEP Reports:

NEP-ALL-2004-06-02 (All new papers)
NEP-LAM-2004-06-02 (Central & South America)

Cited by:
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Calvo-Pardo, Hector & Freund, Caroline & Ornelas, Emanuel, 2009. "The ASEAN free trade agreement : impact on trade flows and external trade barriers," Policy Research Working Paper Series 4960, The World Bank. [Downloadable!]
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- Hector Calvo-Pardo & Caroline Freund & Emanuel Ornelas, 2009. "The ASEAN Free Trade Agreement: Impact on Trade Flows and External Trade Barriers," CEP Discussion Papers dp0930, Centre for Economic Performance, LSE. [Downloadable!]
kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, EconWPA. [Downloadable!]
Karacaovali, Baybars & Limão, Nuno, 2005. "The Clash of Liberalizations: Preferential vs. Multilateral Trade Liberalization in the European Union," CEPR Discussion Papers 4973, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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- Baybars Karacaovali & Nuno Limao, 2005. "The Clash Of Liberalizations: Preferential Vs. Multilateral Trade Liberalization In The European Union," International Trade and Finance Association Conference Papers 1037, International Trade and Finance Association. [Downloadable!]
- Karacaovali, Baybars & Limão, Nuno, 2008. "The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union," Journal of International Economics, Elsevier, vol. 74(2), pages 299-327, March. [Downloadable!] (restricted)
Baybars Karacaovali & Nuno Limao, 2008. "The Clash of Liberalizations: Preferential versus Multilateral Trade Liberalization in the European Union," Fordham Economics Discussion Paper Series dp2008-02, Fordham University, Department of Economics. [Downloadable!]
Other versions:
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Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization Towards Non-Members?," CEP Discussion Papers dp0868, Centre for Economic Performance, LSE. [Downloadable!]
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- Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization toward NonMembers?," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1531-1575, November. [Downloadable!] (restricted)
Giovanni Facchini; Pedro Cavalcanti Ferreira, 2004. "Trade Liberalization and Industrial Concentration:Evidence from Brazil," Econometric Society 2004 Latin American Meetings 126, Econometric Society. [Downloadable!]
Other versions:
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- Cavalcanti Ferreira, Pedro & Facchini, Giovanni, 2005. "Trade liberalization and industrial concentration: Evidence from Brazil," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 432-446, May. [Downloadable!] (restricted)

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