Since Rose's (2004) striking finding of negligible WTO trade effects, numerous studies have attempted to solve the so-called WTO puzzle. These studies have progressively improved model specifications to control for potential sources of bias, but they often lead to conflicting results....

This paper examines how dissimilarity of partner country characteristics affects the change in trade flows under a preferential trade agreement (PTA). Our results show that the more similar the partner countries are, the larger the increase in intra-bloc trade is under a PTA. Particularly, there...