The Impact of trade preferences on export prices in the European Union - who captures the preference rent?
Preferential Trade Agreements (PTAs) aim at increasing trade flows via reductions on applied tariffs and the incentives created by the difference between the applied and the most favoured nation (MFN) tariff, the preference margin. An often omitted element in PTAs evaluation is the possibility that the wedge between preferential and MFN tariffs may induce a preference rent. This paper analyses empirically who captures the preference rent by exploiting a unique dataset of imports in the European Union at a highly disaggregated level (CN-10) linked to information on the preferential regime used and the tariff applied. In order to remove potential bias and measurement errors from comparing preferential prices from specific countries and products with average MFN prices, this paper uses the prices from the same country, product and year. This is possible since we observe in the database a large number of cases where in the same year a preferential regime is both utilised and non-utilised. Our main findings suggest that on average an exporter obtain a larger price margin under a preferential regime than under MFN. However, this preference rent is only partially appropriated by exporters with a pass-through coefficient from preference to price margins that oscillates between 0.16 and 0.5.
|Date of creation:||Nov 2010|
|Contact details of provider:|| Postal: Jubilee Building G08, Falmer, Brighton, BN1 9SL|
Phone: +44 (0) 1273 678889
Fax: +44 (0)1273 873715
Web page: http://www.sussex.ac.uk/economics
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:sus:susewp:1510. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Russell Eke)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.