Regional integration and import prices: an empirical investigation

This paper argues that the effect of regional trading preferences on members of blocs and on excluded countries should be investigated by looking at their effects on the prices at which trade occurs. It offers, we believe, the first ex post empirical exercise of this kind, exploring the effect of Spanish accession to the EC on the prices of imports from major OECD suppliers. Using a simple theoretical model and detailed data on trade in finished manufactures, the results suggest that accession reduced the prices of non-partner exports to Spain relative to those of partner (EC) exports.