On the Trade and Price Effects of Preferential Trade Agreements

Neil Foster, wiiw
with Rod Falvey, School of Business, Bond University

In this paper we extend recent work using the Gravity Model to estimate the trade and price effects of Preferential Trading Arrangements (PTAs), by explicitly taking into account the extent of the preferential access being provided by the importer. This involves specifying a trade model, deriving appropriate PTA variables, appending them to a gravity-type equation and estimating it. Estimates of the relative price effects of PTAs are derived and a range of PTAs are considered.


Research Areas: International Trade, Competitiveness and FDI