Assessing differential impacts of a trade agreement using a quantile regression approach

Abstract Using farm‐level panel data, we directly estimate the impacts of the Korea–Chile Free Trade Agreements (FTA) on the revenue of the firms in South Korea that faced greater imports—agricultural producers as the FTA induced greater imports of fruits and vegetables from Chile to South Korea. As expected, we find the negative effect of the increased imports on the total crop revenue and profit of the farms. We model and examine the differential impacts and find that the negative effects are greater for high‐revenue farms. We document the evidence of the lack of immediate adjustment as a response to the negative shocks from the trade agreement.