On the Pro-competitive Effects of Regional Trading Agreements

Viaene Jean-Marie () and Jose Moraga-Gonzalez
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Viaene Jean-Marie: Erasmus University Rotterdam

Acta Universitatis Sapientiae, Economics and Business, 2013, vol. 1, issue 1, 5-22

Abstract: We explore the pro-competitive effects of trade policies in a model where a competitive fringe of domestic firms compete with a foreign duopoly exporting vertically differentiated goods. We show that discriminatory nonuniform tariff policies are preferred over the Most Favored Nation (MFN) clause because, besides extracting rents from foreign firms, they foster competition in the market. Regional Trading Agreements (RTAs), which favor members relative to non-members, are examples of such nonuniform tariff policies.

Keywords: endogenous quality; hedonic prices; pro-competitive policies; regional trade agreements (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:auseab:v:1:y:2013:i:1:p:5-22:n:1

DOI: 10.2478/auseb-2014-0001

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