Essays on regionalism in standards, international trade, and multinationals

Chapter 1 overviews the motivation, main findings and contributions of this dissertation.; Chapter 2 analyzes the trade implications of regional agreements on standards. I find that such agreements increase trade between participating countries but not necessarily with the rest of the world. Harmonization of standards boosts exports of excluded developed countries to the region but reduces exports of excluded developing countries, as developing country firms suffer more from an increase in the stringency of standards and benefit less from economies of scale in integrated markets. Mutual Recognition Agreements (MRAs) are uniformly trade promoting unless they contain rules of origin, in which case intra-regional trade increases at the expense of trade with other, especially developing, countries.; Chapter 3 considers the locational effects of regionalism in standards. I develop a three-country model, in which firms in an outside country consider options for serving a two-country region, including exporting to both insider countries, building one plant in one to serve both, or building plants in both. Harmonization of standards within the region lowers the fixed costs of serving the region especially for firms with concentrated production. Thus, multinationals' propensity to concentrate their production rises. By contrast, the MRA between the region and the outsider country reduces trade costs and favors trade rather than multinationals. Empirical evidence confirms an increase in multinationals' concentration after harmonization, in which countries with large market size or low labor cost become even more attractive. The MRA, however, significantly reduces the sales by affiliates located in the region.; Chapter 4 examines an interplay between the optimal quality standards and the endogenous market structure in a North-South model of vertical differentiation. It is shown that the North, driven by its consumers' high valuation for quality, would raise its standard to exclude the low-quality foreign firm and maximize its monopolistic welfare. It is also stressed that the globally optimal harmonization, when the difference between the North and the South in market size or cost is relatively small, requires the North to reduce its standard, and raises exports and welfare in the South at the cost of welfare loss in the North.; Chapter 5 concludes the dissertation.