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CEP discussion paper
Brands in motion: how frictions shape multinational production
Keith Head and Thierry Mayer
June 2018
Paper No' CEPDP1551:
Full Paper (pdf)

Tags: trade agreements; brexit; tariffs; non-tariff barriers

Following the 2016 Leave vote in the referendum on UK membership in the EU and the election of Donald Trump, trade agreements have entered a period of great instability. To predict the impact of possible disruptions to existing arrangements requires counterfactual analysis that takes into account the complex set of factors influencing the production and marketing strategies of multinational corporations. We estimate a model of multinational decision making in the car industry. This model predicts the production reallocation and consumer surplus consequences of changes in tariffs and non-tariff barriers induced by NAFTA termination, Brexit, Trans-Pacific and Trans-Atlantic integration agreements.