IDEAS home Printed from https://ideas.repec.org/p/emx/ceedoc/2020-02.html

On potential Pareto gains from free trade areas formation

Author

Listed:
  • Jaume Sempere

    (El Colegio de México)

Abstract

This paper extends the results of Grinols and Silva (2011) to Free TradeAreas with rules of origin requiring a minimum national content. These rulesinclude, for instance, the ones stipulated in the NAFTA (or the USMCA)agreement. In our model, producers decide whether or not to comply withrules of origin to avoid paying tariffs to export to other FTA members. How-ever, there is a technical problem caused by the fact that, as prices change,producers can switch from production plans that satisfy rules of origin toproduction plans that do not. This can produce a discontinuity in the sup-ply correspondence. We prove existence of equilibrium with Pareto gainsfrom forming FTAs by assuming that there are a continuum of producerswith an atomless distribution of characteristics.

Suggested Citation

  • Jaume Sempere, 2020. "On potential Pareto gains from free trade areas formation," Serie documentos de trabajo del Centro de Estudios Económicos 2020-02, El Colegio de México, Centro de Estudios Económicos.
    • Handle: RePEc:emx:ceedoc:2020-02
    as

    Download full text from publisher

    File URL: https://cee.colmex.mx/dts/2020/DT-2020-2.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:emx:ceedoc:2020-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ximena Varela (email available below). General contact details of provider: https://edirc.repec.org/data/cecolmx.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.