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Regulation, market structure and service trade liberalization

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  • Konan, Denise Eby
  • Van Assche, Ari

Abstract

In this paper, we develop a method to quantify the importance of regulation and market structure on the success of trade liberalization. For this purpose, we incorporate a single imperfectly competitive service sector that can take on various market structures into a standard computational general equilibrium model. We apply our framework to analyze the impact of allowing a single foreign telecom provider to enter Tunisia. If the regulation environment guarantees competition, Tunisia’s welfare can improve up to 0.65 percent. If a cartel is formed between the domestic incumbent and foreign entrant, however, Tunisia’s welfare can drop up to 0.25 percent. Our results thus call for Tunisia among other developing countries to step up its procompetitive regulatory reforms while liberalizing its telecom sector. Dans ce papier, nous développons une méthode permettant de quantifier l’importance de la réglementation et de la structure des marchés sur la libéralisation du commerce et sur son succès. À ces fins, nous incorporons un secteur unique et imparfaitement compétitif pouvant intégrer différentes structures de marché dans un modèle standard de calcul d’équilibre général. Nous appliquons notre cadre d’analyse afin d’étudier l’impact de l’entrée d’un seul fournisseur étranger en Tunisie. Nous trouvons que si la réglementation du marché y garantit la compétition, le bien-être de la Tunisie peut augmenter de 0,65 %. Cependant, s’il y a formation d’un cartel entre le réseau domestique et l’entrant étranger, le bien-être de la Tunisie peut baisser de 0,25 %. Nos résultats démontrent que tout en libéralisant son secteur des télécommunications, la Tunisie bénéficierait de réformes visant des régulations pro-compétitives.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 24 (2007)
Issue (Month): 6 (November)
Pages: 895-923

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Handle: RePEc:eee:ecmode:v:24:y:2007:i:6:p:895-923

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Web page: http://www.elsevier.com/locate/inca/30411

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References

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  1. Varoudakis, Aristomene & Rossotto, Carlo Maria, 2004. "Regulatory reform and performance in telecommunications: unrealized potential in the MENA countries," Telecommunications Policy, Elsevier, Elsevier, vol. 28(1), pages 59-78, February.
  2. Maskus, Keith E & Konan, Denise Eby, 1997. "Trade Liberalization in Egypt," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 1(3), pages 275-93, October.
  3. Deardorff, A.V. & Brown, D.K. & Stern, R.M., 1996. "Some Economic Effects of the Free Trade Agreement Between Tunisia and the European Union," Working Papers, Research Seminar in International Economics, University of Michigan 385, Research Seminar in International Economics, University of Michigan.
  4. Drusilla K. Brown & Robert M. Stern, 2000. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0001, Department of Economics, Tufts University.
  5. Joseph Francois & Ian Wooton, 2000. "Market Structure, Trade Liberalization and the GATS," Tinbergen Institute Discussion Papers 00-059/2, Tinbergen Institute.
  6. Arnold, Jens & Javorcik, Beata S. & Mattoo, Aaditya, 2007. "Does services liberalization benefit manufacturing firms ? Evidence from the Czech Republic," Policy Research Working Paper Series 4109, The World Bank.
  7. John Whalley, 2003. "Assessing the Benefits to Developing Countries of Liberalization in Services Trade," NBER Working Papers 10181, National Bureau of Economic Research, Inc.
  8. Konan, Denise Eby & Maskus, Keith E., 2003. "Quantifying the impact of services liberalization in a developing country," Policy Research Working Paper Series 3193, The World Bank.
  9. Deardoff, A.V. & Brown, D.K. & Stern, R.M. & Fox, A.K., 1995. "Computational Analysis of Goods and Services Liberalization in the Uruguay Round," Working Papers, Research Seminar in International Economics, University of Michigan 379, Research Seminar in International Economics, University of Michigan.
  10. Markusen, James & Rutherford, Thomas F. & Tarr, David, 2000. "Foreign direct investment in services and the domestic market for expertise," Policy Research Working Paper Series 2413, The World Bank.
  11. Denise Eby Konan & Keith Maskus, 1997. "Joint Trade Liberalization and Tax Reform in a Small Open Economy: The Case of Egypt," Working Papers, University of Hawaii at Manoa, Department of Economics 199703-R, University of Hawaii at Manoa, Department of Economics.
  12. Thomas W. Hertel, 2000. "Potential gains from reducing trade barriers in manufacturing, services and agriculture," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 77-104.
  13. Aaditya Mattoo & Pierre Sauve, 2003. "Domestic Regulation and Service Trade Liberalization," World Bank Publications, The World Bank, number 15081, October.
  14. Jesper Jensen & Thomas Rutherford & David Tarr, 2007. "The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 11(3), pages 482-506, 08.
  15. James Markusen & Thomas Rutherford & David Tarr, 2005. "Trade and direct investment in producer services and the domestic market for expertise," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 758-777, August.
  16. Philippa Dee & Kevin Hanslow, 2002. "Multilateral liberalisation of services trade," International Trade, EconWPA 0207002, EconWPA.
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Cited by:
  1. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2012. "CGE modeling of market access in services," Policy Research Working Paper Series 6106, The World Bank.
  2. Amir Hadziomeragic & Malgorzata Jakubiak & Nermin Oruc & Wojciech Paczynski, 2007. "Regional Free Trade Agreements of Bosnia and Herzegovina: analysis and policy recommendations," CASE Network Reports 0069, CASE-Center for Social and Economic Research.
  3. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2013. "Computable General Equilibrium Modeling of Market Access in Services," Handbook of Computable General Equilibrium Modeling, Elsevier.
  4. Chisari, Omar O. & Maquieyra, Javier & Romero, Carlos A., 2009. "Liberalization of trade in services: A CGE analysis for Argentina, Brazil and Uruguay," MPRA Paper 15336, University Library of Munich, Germany.

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