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How Do Free Trade Agreements Change Import Prices?: Firm-level Evidence from China’s Imports from ASEAN

Discussion Papers


by Kazunobu HAYAKAWA, Chih-Hai YANG
December 2013


The literature has revealed the positive impacts of free trade agreements (FTAs) on export prices by employing product-level trade data. This paper empirically examines the impacts of FTAs on import prices at the firm level. We focus on firm-level imports in China from ASEAN countries by employing China’s firm-product-level trade data. As a result, controlling for firm characteristics and product characteristics, we could not find significantly positive impacts of an FTA’s entry into force on import prices of FTA eligible products. Instead, we found a significant increase in import quantities of FTA eligible products. Thus, at the firm level, the gains from FTAs for exporters may be the increase in export quantities rather than the rise in export prices.

Keywords: Free trade agreement, prices, FTA utilization
JEL classification: F10; F13; F15

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