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I've Been Everywhere (Except Mexico):
Investor Responses to NAFTA's Cross-Border Trucking Provisions

Ronald B. Davies, University College Dublin, G215 Newman Building, Belfield, Dublin 4, Ireland
Benjamin H. Liebman, St. Joseph's University, 5600 City Ave., Philadelphia, PA 19131, USA
Kasaundra Tomlin, Oakland University, School of Business Administration, 355 Elliot Hall, Rochester, MI 48309, USA

IIIS Discussion Paper No. 467

We investigate the response of US trucking firms to the removal of barriers to cross-border trucking under NAFTA. This was done via a program implemented in 2007, cancelled in 2009, and reinstated in 2011. We find that, unsurprisingly, the program's start resulted in lower stock returns, particularly for border firms. However, later policy changes indicate that investors, and particularly those in US multinationals, viewed the pilot as beneficial. We use a model of endogenous exporting to show that this can arise from incorrect expectations of import competition.

JEL Codes: F13; F15; F20
Key Words: Non-tariff Barriers; Services; Commercial Policy; Protection; Promotion; Trade Negotiations.

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Last updated 20 February 2015 by IIIS (Email).