A customs union with multinational firms
Subtitle: the automobile market in Argentina and Brazil
By: Irene Brambilla.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11745; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11745.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Automobile industry and trade -- Argentina -- Econometric models.; Automobile industry and trade -- Brazil -- Econometric models.; Non-tariff trade barriers -- Argentina -- Econometric models.; Non-tariff trade barriers -- Brazil -- Econometric models.; Customs unions.; International business enterprises -- Argentina.; International business enterprises -- Brazil.
Description: "This paper looks empirically into the behavior of multinational firms in international oligopolistic markets with trade balance constraints.  I show how a particular form of non-tariff barrier applied at the firm level can lead to an increase in trade flows in the presence of intra-firm strategic trade.  In my application, I estimate a model of demand, supply and trade policy in the automobile sector in Argentina and Brazil during 1996-1999.I measure the economic impact of a trade balance constraint that was in effect during that period and I compute predicted economic outcomes for the full adoption of a customs union, as has been agreed as part of the Mercosur negotiations, separating the sometimes opposing impacts of the removal of non-tariff barriers and the adoption of a common external tariff.  Results show that the elimination of non-tariff barriers dominates the leveling of tariffs.  Imports from outside of Mercosur increase under the new regime even though tariffs against these goods become more discriminatory, and exports from Brazil to Argentina decrease once the trade balance constraint is removed"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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