Market presence, contestability, and the terms-of-trade effe
Market presence, contestability, and the terms-of-trade effects of regional integration
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How firms react to a given shock may depend on the degree to which rivals are present and on whether potentially viable entrants to that market exist. A preferred supplier market presence and threat of entry lessen a nonmember country's price reaction to most-favored-nation trade liberalization and increase its price reaction to preferential trade liberalization.
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