Preferential tariff policy, product quality and welfare

초록

This paper shows that when firms consider quality as a long run choice variable, a preferential free trade arrangement can create a quality gap in favor of its member countries, as long as R&D spillovers are not perfect, and increases welfare of member countries. This result implies that a preferential free trade arrangement such as a free trade area or a customs union can bring an exclusive long run benefit to the member countries.

키워드