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Trade and Investment Liberalization in the Processed Food Market under the Comprehensive Economic and Trade Agreement

Author

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  • Luckstead, Jeff
  • Devadoss, Stephen

Abstract

We investigate the impacts of Comprehensive Economic and Trade Agreement (CETA) liberalizations of trade and investment barriers on processed food markets. Using a four-region monopolistic competition model with heterogeneous food-processing firms that incorporates domestically operating, exporting, and multinational enterprise (MNE) firms, we quantify the effects of tariff elimination, fixed trade cost reduction, and foreign direct investment (FDI) cost reduction under CETA on prices, domestic sales, bilateral trade flows, affiliate sales, productivity, number of firms, and aggregate output. Our results highlight that trade liberalization promotes bilateral exports but reduces foreign affiliate sales, and, in contrast, lower FDI costs expand MNE affiliate sales but curtail bilateral exports.

Suggested Citation

  • Luckstead, Jeff & Devadoss, Stephen, 2019. "Trade and Investment Liberalization in the Processed Food Market under the Comprehensive Economic and Trade Agreement," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 44(2), May.
    • Handle: RePEc:ags:jlaare:287972
    DOI: 10.22004/ag.econ.287972
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