Impact of Free Trade Agreement Use on Import Prices
This paper examines the impact of free trade agreement (FTA) use on import prices. For this analysis, it employs establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/739011524146785121/Impact-of-free-trade-agreement-use-on-import-prices http://hdl.handle.net/10986/29718 |
| Summary: | This paper examines the impact of free
trade agreement (FTA) use on import prices. For this
analysis, it employs establishment-level import data with
information on tariff schemes, that is, the FTA and
most-favored-nation schemes used for importing. Unlike
previous studies, this paper estimates the effects of FTA
use on prices by controlling for differences in
importing-firm characteristics. There are three main
findings. First, the effect of FTA use is overestimated when
not controlling for importing firm-related fixed effects.
Second, on average, firms' FTA use reduces tariffs by
12 percentage points and raises import prices by 3.6-6.7
percent. Third, in general, a price rise resulting from the
costs of complying with rules of origin was not found. |
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