How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR

Won Chang and L. Winters

American Economic Review, 2002, vol. 92, issue 4, 889-904

Abstract: The welfare effects of PTAs are most directly linked to changes in trade prices, i.e., the terms of trade. This paper employs a simple strategic pricing game in segmented markets to measure the effects of MERCOSUR on the pricing of "nonmember" exports to Brazil: As Brazil exempts its MERCOSUR partners from tariffs, the resulting competitive pressure leads other exporters to reduce their prices. Working with detailed data on unit values and tariffs we find that the creation of MERCOSUR was associated with significant declines in the prices of nonmembers' exports to the region. (JEL F13, F15).

Date: 2002
Note: DOI: 10.1257/00028280260344515
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Related works:
Chapter: How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR (2015)
Chapter: How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR (2012)
Working Paper: How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR (1999)
Working Paper: How regional blocs affect excluded countries - the price effects of MERCOSUR (1999)
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