DP1848 | Endogenous Tariff Formation: The Case of Mercosur

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This paper confronts the results of the endogenous tariff literature with MERCOSUR (Mercado Comun del Sur, literally, ?the Common Market of the Southern Cone?) evidence. It is shown that MERCOSUR?s common external tariff (CET), and member countries? deviations from the CET and from internal free trade can be explained by sector/industry lobbying as predicted by the endogenous tariff literature. If political economy viability is a key to success, then MERCOSUR is here to stay.