Dr. Pablo Robles Discusses the Impact of NAFTA on Mexican Manufacturing Plants’ Output Prices and Markups in a Recent Journal of International Economics Article

Principal Dr. Pablo Robles has coauthored a recent article in the Journal of International Economics examining how the North American Free Trade Agreement (NAFTA) affected Mexican manufacturing plants’ output prices, marginal costs, and markups.

In their analysis, the authors distinguish between goods sold domestically and those exported, decomposing prices into markups and marginal costs. They studied how NAFTA-driven tariff reductions – specifically on Mexican output tariffs, intermediate input tariffs, and US tariffs on Mexican exports –impacted output prices and markups. The authors found that domestic and exported product varieties of Mexican goods responded differently to tariff changes: prices of domestically sold products declined significantly as Mexican plants faced greater competition and gained access to cheaper inputs, whereas prices of exported goods – benefiting from a more favorable competitive environment due to lower US tariffs – declined only slightly.

The full article, “The Impact of NAFTA on Prices and Competition: Evidence from Mexican Manufacturing Plants,” is available on the ScienceDirect website for free until May 25, 2025.