Market Access and Welfare Effects of Free Trade Areas without Rules of Origin

Jiandong Ju and Kala Krishna ()

No 96-03, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: The market access and welfare effects of Free Trade Areas (FTAs) without Rules of Origin (ROOs) are studied. We consider the final and intermediate goods markets and their interlinkage. The FTA weakly reduces all tariffs and prices within the FTA. This raises quantity demanded and reduces quantity supplied for both the final and intermediate goods, thereby raising imports. This is the classic trade creation effect and is welfare improving. We identify two additional effects which work in the opposite direction and identify conditions under which these welfare reducing, import reducing effects dominate.

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Related works:
Working Paper: market Access and Welfare Effects of Free Trade Areas without Rules of origin (1996)
Working Paper: Market Access and Welfare Effects of Free Trade Areas without Rules of Origin (1996)
Working Paper: Market Access and Welfare Effects of Free Trade Areas Without Rules of Origin (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:epruwp:96-03

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