Journal
WORLD BANK ECONOMIC REVIEW
Volume 33, Issue 3, Pages 643-660Publisher
OXFORD UNIV PRESS
DOI: 10.1093/wber/lhx026
Keywords
free trade agreement; Thailand; tariffs
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Funding
- JSPS KAKENHI [26705002]
- Grants-in-Aid for Scientific Research [26705002] Funding Source: KAKEN
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We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.
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