Publication Type
Journal Article
Version
publishedVersion
Publication Date
5-2025
Abstract
This paper assesses the impact of the North American Free Trade Agreement on Mexican manufacturing plants’ output prices and markups. We distinguish between Mexican goods that are exported and those sold domestically, and decompose their prices separately into markups and marginal costs. We then analyze how these components were affected by the reductions in Mexican output tariffs, intermediate input tariffs, and U.S. tariffs on Mexican exports. We find that domestically sold products saw a decline in prices as Mexican plants faced more competition and gained access to cheaper inputs. Prices of exported goods fell only slightly as plants increased their markups in response to a favorable competitive environment due to declines in U.S. tariffs.
Keywords
Markup estimation, Multi-product plants, Trade liberalization, FTAs, Pro- and Anti- competitive effects
Discipline
International Economics
Research Areas
International Economics
Areas of Excellence
Growth in Asia
Publication
Journal of International Economics
Volume
155
First Page
1
Last Page
17
ISSN
0022-1996
Identifier
10.1016/j.jinteco.2025.104085.
Publisher
Elsevier
Citation
BRUGUÉS, Felipe; KIKKAWA, Ayumu Ken; MEI, Yuan; and ROBLES, Pablo.
The impact of NAFTA on prices and competition: Evidence from Mexican manufacturing plants. (2025). Journal of International Economics. 155, 1-17.
Available at: https://ink.library.smu.edu.sg/soe_research/2838
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jinteco.2025.104085.