The “distance effect” measuring the elasticity of trade flows to distance has been to be rising since the early 1970s in a host of studies based on the gravity model, leading observers to call it the “distance puzzle”. We review the evidence and explanations. Using an extensive data set...

This paper uses a price-leadership model of the international vanilla market to study the welfare consequences of alternative pricing policies for Madagascar – a country that controls domestic production through a single-channel marketing system and is the leader in the vanilla market....

The paper considers the effects of trade expansion between the EU and the Central and East European Countries (CEECs) on France. Taking a political-economy perspective, we attempt to detect potential demand for protection at the sectoral and regional level. Recent aggregate figures for trade and...

This paper simulates the costs of the US-Japan auto VER. Under a standard constant returns to scale (CRTS) formulation, the costs are estimated at about $10 billion. It then sequentially introduces important features of the auto VER: endogenous rent premium determination, wage distortions in...

With preferential trading Agreements (PTAs) on the rise worldwide with multiple memberships, rules of origin-- which are necessary to prevent trade deflection --are attracting increasing attention. At the same time, preference erosion for GSP recipients is threatening the viability of the...

This paper explores the links between the patterns of migration (high vs. low-skill), trade policy, and foreign direct investment (FDI) from the standpoint of sending countries. A skeleton general equilibrium model with a non-traded good and sector-specific labour is used to explore the effects...

The paper develops two synthetic measures at the HS-10 level to depict effective market access for a country receiving preferential access and applies these to the market access ASEAN members would receive on impact following the implementation of an FTA with the EU. These measures reveal quite...

This paper explores how political-economy forces shape quantitative barriers against the rest of the world in a FTA. We show that whereas the dilution of lobbying power in a FTA typically leads to a relaxation of external quotas, this result is likely to be overturned as integration deepens. In...

All preferential trading agreements (PTAs) short of a customs union use Rules of Origin (RoO) to prevent trade deflection. RoO raise production costs and create administrative costs. This Paper argues that in the case of the recent wave of North-South PTAs, the presence of RoO virtually limits...

The paper identifies the potential sources of allocative inefficiency generated by the Multi-Fiber Agreements (MFA) and examines the evidence for such inefficiencies. Five sources of inefficiency are identified relating to inefficient allocations across countries, across consumers, and among...