Firm Behaviour and Market Access in a Free Trade Area with Rules of Origin

19 Pages Posted: 26 Jan 2005

See all articles by Jiandong Ju

Jiandong Ju

University of Oklahoma - Department of Economics; Tsinghua University - PBC School of Finance

Kala Krishna

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

We study a Free Trade Area with Rules of Origin and show that there are two distinct regimes. Comparative statics results for the two regimes are exact opposites and a regime switch occurs when ROO become restrictive enough. Consequently, imports into the FTA of the intermediate good first fall and then rise while the opposite pattern occurs for imports of the final good and for the price of the domestic input. We also show that tighter ROO have opposite effects on the well-being of final versus intermediate good producers and producers inside versus outside the FTA.

JEL Classification: F13, F15

Suggested Citation

Ju, Jiandong and Krishna, Kala, Firm Behaviour and Market Access in a Free Trade Area with Rules of Origin. Available at SSRN: https://ssrn.com/abstract=654080

Jiandong Ju (Contact Author)

University of Oklahoma - Department of Economics ( email )

729 Elm Avenue
Norman, OK 73019-2103
United States
405-325-5492 (Phone)
405-325-5842 (Fax)

Tsinghua University - PBC School of Finance

No. 43, Chengdu Road
Haidian District
Beijing 100083
China

Kala Krishna

Pennsylvania State University - Department of Economics ( email )

523 Kern Graduate Building
University Park, PA 16802-3306
United States
814-865-1106 (Phone)
814-863-4775 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
28
Abstract Views
780
PlumX Metrics