Abstract
This study examines the impacts of Japan-Mexico FTA (JMXFTA) on Japanese exports to Mexico. The authors construct a theoretical trade model of heterogeneous firms based on the Melitz-Chaney model, and derive the theoretical relationship of the impacts of tariff changes on extensive and intensive trade margins. Applying this model, the authors estimate the impacts of JMXFTA on product-level extensive and intensive margins of Japan’s exports to Mexico by using the most detailed commodity trade data. The results show that the tariff reduction due to JMXFTA increases the intensive margin while no clear evidence is found regarding the effect on extensive margin. This indicates that in the short-run, the JMXFTA exerted more favorable effect on the existing exporters than on new export market entrants.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
