How regional blocs affect excluded countries - the price effects of MERCOSUR

Won Chang and L. Winters

No 2157, Policy Research Working Paper Series from The World Bank

Abstract: The welfare effects of preferential trading agreements, are most directly linked to changes in trade prices - that is, the terms of trade. The authors use a simple strategic pricing game in segmented markets, to measure the effects of MERCOSUR on the pricing of"non-member"exports to the regional trading bloc. Working with detailed data on unit values, and tariffs, they find that the creation of MERCOSUR is associated with significant declines in the prices of non-members'exports to the bloc. These can be explained largely by tariff preferences offered to a country's partners. Focusing on the Brazilian market (by far the largest in MERCOSUR), they show that non-members'export prices to Brazil respond to both most-favorable-nation, and preferential tariffs. Preferential tariffs induce reductions in non-memberexport prices.

Keywords: Environmental Economics&Policies; Economic Theory&Research; Markets and Market Access; Export Competitiveness; Payment Systems&Infrastructure; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Economic Theory&Research; Markets and Market Access; Access to Markets (search for similar items in EconPapers)
Date: 1999-08-31
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Citations: View citations in EconPapers (14)

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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)
Journal Article: How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR (2002)
Working Paper: How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR (1999)
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