NAFTA as a Means of Raising Rivals' Costs

The North American Free Trade Agreement (NAFTA) was designed to reduce tariff rates between Mexico, Canada and the U.S.A. over a period of ten years. However, lower tariff rates are only available to firms that comply with complicated and costly NAFTA filing regulations. Such regulations raise costs...

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Veröffentlicht in:Review of industrial organization 1999-09, Vol.15 (2), p.103-113
Hauptverfasser: DEPKEN, CRAIG A., FORD, JON M.
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creator DEPKEN, CRAIG A.
FORD, JON M.
description The North American Free Trade Agreement (NAFTA) was designed to reduce tariff rates between Mexico, Canada and the U.S.A. over a period of ten years. However, lower tariff rates are only available to firms that comply with complicated and costly NAFTA filing regulations. Such regulations raise costs of small firms relative to large firms in a domestic industry which engages in trade between NAFTA countries. This implication of NAFTA regulations can lead to increased concentration in domestic industries, an hypothesis which can be tested as the transition period comes to an end. Finally, our model suggests an explanation for why the levels of trade from the U.S.A. to Mexico have been lower than general expectations.
doi_str_mv 10.1023/A:1007796825076
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source PAIS Index; SpringerLink Journals; EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing
subjects Competition
Competitive advantage
Compliance
Compliance costs
Costs
Economic costs
Economic models
Fixed costs
Free trade
Game theory
Hypotheses
Industrial concentration
Industrial economics
Industrial market
Industrial regulation
Marginal costs
NAFTA
North American Free Trade Agreement
Regulation
Size of enterprise
Small & medium sized enterprises-SME
Studies
Tariffs
Trade
Trade agreements
Trade regulations
Writers
title NAFTA as a Means of Raising Rivals' Costs
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