Optimal Rules of Origin with Asymmetric Compliance Costs under International Duopoly

Naoto Jinji and Yoshihiro Mizoguchi

Discussion papers from Graduate School of Economics Project Center, Kyoto University

Abstract: We examine the optimal rules of origin (ROO) in a free trade area/agreement (FTA). We incorporate compliance costs of the ROO into the model. In particular, compliance costs are higher for a firm located in a non-member country of the FTA than for a firm located in an FTA member country, whereas marginal production costs are lower for the former. An importing country within the FTA imposes tariffs on imports that do not comply with the ROO. We show that the optimal ROO may have a protectionist bias or cause low utilization of FTAs depending on parameter values.

Keywords: free trade area/agreement; rules of origin; compliance costs; oligopoly; double rent-shifting (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2015-02
New Economics Papers: this item is included in nep-int and nep-mfd
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Optimal Rules of Origin with Asymmetric Compliance Costs under International Duopoly (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:kue:dpaper:e-14-016

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