Trade in the Triad: how easy is the access to large markets?
Abstract
In this paper, we measure market access between the United States, the EU, and Japan (the Triad), using the effect of national borders on trade patterns. We investigate overall and industry-level trends of bilateral trade openness and provide explanations for those using proxies for bilateral observed protection (tariffs and NTBs), home bias of consumers, product differentiation, and levels of FDI. The explanations related to actual protection, home bias and substitutability of goods put together explain a large part of the border effect between blocs of the Triad, although they do not explain the whole of the border effect puzzle.
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