Author: Keith Head
Publisher: Industrie Canada
Published: 1999
Total Pages: 100
ISBN-13:
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This paper develops two theoretical models that offer opposing predictions about the effects of market size and tariff reductions on a country's share of production. It expands these models to include standard comparative advantage effects of trade liberalization. The models are evaluated using matched Canadian and US manufacturing data for the period 1990-1995. The paper first estimates the "border effect", or the barriers to trade, both tariff and non-tariff, that impede consumption of imported goods. It then tests the theoretical prediction of its two models. It examines the relationship between a Canadian industry's share of North American demand for that industry's goods and Canada's share of the output of that industry. In addition, it evaluates how tariffs influence this relationship.