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

journal contribution
posted on 2023-06-07, 19:36 authored by Won Chang, L. Alan WintersL. Alan Winters
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

History

Publication status

  • Published

Journal

American Economic Review

ISSN

0002-8282

Publisher

American Economic Association

Issue

4

Volume

92

Page range

889-904

Pages

16.0

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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