Reglas de origen de tratados de libre comercio: efectos sobre el uso de factores internos de la producción

Abstract

This paper addresses the effect of rules of origin regulations on the use of domestic factors of production in the country of origin. In the case of a firm that is a perfect competitor in the final product market, these regulations have two effects: first there is a direct substitution effect due to the regulation that will increase the use of the domestic factor and second, there is an indirect output effect due to the increased cost that will reduce the demand for the domestic factor. In the case of a firm that has a monopoly power in the final product market, the declining marginal revenue curve faced by the firm causes the reallocation of output between domestic and foreign plants. This reallocation may further decrease the demand for the domestic factor of production.