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Firm behaviour and market access in a Free Trade Area with rules of origin

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  • Jiandong Ju
  • Kala Krishna

Abstract

We study a Free Trade Area with Rules of Origin and show that there are two distinct regimes. Comparative statics results for the two regimes are exact opposites and a regime switch occurs when become restrictive enough. Consequently, imports into the of the intermediate good first fall and then rise while the opposite pattern occurs for imports of the final good and for the price of the domestic input. We also show that tighter have opposite effects on the well-being of final versus intermediate good producers and producers inside versus outside the FTA.

Suggested Citation

  • Jiandong Ju & Kala Krishna, 2005. "Firm behaviour and market access in a Free Trade Area with rules of origin," Canadian Journal of Economics, Canadian Economics Association, vol. 38(1), pages 290-308, February.
  • Handle: RePEc:cje:issued:v:38:y:2005:i:1:p:290-308
    DOI: 10.1111/j.0008-4085.2005.00281.x
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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