Preferential Trade Agreements and the Margins of Imports

This paper considers the importance of Preferential Trade Agreements (PTAs) in enhancing trade for a large sample of countries within the period 1962-2000. The paper builds upon the existing literature by examining whether any significant effects of PTAs occur through a change in the variety of imports (i.e. the extensive margin) or through a change in the volume of existing products (the intensive margin). Our results indicate that imports respond positively to the formation of a PTA between countries, and that much of this increase in imports occurs along the extensive margin.