Price-Cost Margins and Economic Integration: How Important is the Pro-Competitive Effect?
type="main" xml:id="twec12245-abs-0001"> In this paper, we examine whether the so-called pro-competitive effect holds when two countries integrate by forming a common market. We propose a general framework of reference, where the price-cost margin of domestic firms depends on a set of variables in addition to trade costs with the partner country, which might eventually offset the conventional result.
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