Arbeitspapier

Rules of origin and consumer-hurting free trade agreements

This study examines how the rules of origin (RoO) of a free trade agreement (FTA) affect firms' pricing strategies. A value-added criterion (VAC) of the RoO requires firms to add more than a certain level of values within an FTA when firms use inputs originating from outside the FTA. The VAC may have a collusive effect that benefits all firms if it induces an offshoring firm to manipulate its output price. Meanwhile, a consumer-hurting FTA formation is possible even if all firms make tariff-free exports. Furthermore, such an FTA formation may worsen total welfare.

Language
Englisch

Bibliographic citation
Series: Munich Discussion Paper ; No. 2019-1

Classification
Wirtschaft
Trade Policy; International Trade Organizations
Economic Integration
Production, Pricing, and Market Structure; Size Distribution of Firms
Subject
Rules of origin
Free trade agreement
Pricing strategy

Event
Geistige Schöpfung
(who)
Mukunoki, Hiroshi
Okoshi, Hirofumi
Event
Veröffentlichung
(who)
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
(where)
München
(when)
2019

DOI
doi:10.5282/ubm/epub.61759
Handle
URN
urn:nbn:de:bvb:19-epub-61759-3
Last update
10.03.2025, 11:45 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Mukunoki, Hiroshi
  • Okoshi, Hirofumi
  • Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät

Time of origin

  • 2019

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