Tariff Scheme Choice

Discussion Papers

No.684

by Kazunobu Hayakawa, Nuttawut Laksanapanyakul, and Taiyo Yoshimi

January 2018

ABSTRACT

This study examines the determinants of the probability that exporters choose between a most-favored nation (MFN) scheme and multiple regional trade agreement (RTA) schemes. It estimates a nested logit model using a transaction-level import data for Thailand from other ASEAN countries in 2014. The study finds that RTA schemes are more likely to be chosen rather than the MFN scheme in case of a larger transaction value. Among RTA schemes, the one with less restrictive rules of origin or lower RTA tariff rates is more likely to be chosen. In addition to some results of simulation analyses, this study provides some quantitative interpretation of our estimation results.

Keywords: RTA; Rules of origin; Discrete choice models; Firm heterogeneity
JEL classification: F15; F53

Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.