To analyze the effects of simultaneous tariff reductions by multiple importing countries on prices, we construct a simple three-country model where a good is produced by a monopolist with nonconstant marginal cost and imported by two countries. We compare two representative tariff-reduction...

Free trade agreements (FTAs) have rules of origin (ROOs) to prevent tariff circumvention by firms of nonmember countries. This article points out that in imperfectly competitive markets, ROOs have another role overlooked in the existing literature. Instead of focusing on the impacts of ROOs in...