How the Movement of Natural Persons Agreement Could Fuel FTAs

Author Name KOMORIYA Yoshimasa  (Chuo University)
Creation Date/NO. July 2014 14-E-041
Research Project Economic Analysis on Trade Agreements
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We use an international oligopoly model to explore the effects of reductions in trade cost (non-tariff barrier) and travel cost on the domestic and foreign economies, when the choice of the foreign direct investment (FDI) production level is endogenous. In the case where the home firm produces in both countries, consumers invariably gain from the cost reductions, but the effects on producers are very complex. Using these findings, we discuss the importance of the movement of natural persons (MNP) agreement and its great potential in creating a free trade agreement (FTA) between the two countries.