PRICE EFFECTS OF TRADE OPENNESS ON TRADED AND NON-TRADED GOODS

The key motivation behind this research was to empirically estimate the competitive effects of trade liberalization on prices of 22 selected consumer traded and 2 nontraded goods most frequently consumed by the poorest households in Pakistan. For this, a theoretical framework of Heckscher-Ohlin-Samuelson model was used. For the study purpose, Time Series of retail domestic and international prices, household expenditure on various goods and import tariff on commodities stretched to the period of 36 years was used. The results confirm that a fall in tariff rates reduces the prices of all selected traded goods significantly that induces household demand for the goods. At the end, key limitations of this study and scope of future research were discussed