Protection for Sale Under Monopolistic Competition: An Empirical Investigation
AbstractThis paper proposes a general empirical framework to estimate the protection-for-sale model, where the protection regime shifts according to a sector's market structure (perfectly or monop-olistically competitive). We base the protection structure on Grossman and Helpman (1994) for the subset of perfectly competitive sectors and on Chang (2005) for the subset of monop- olistically competitive sectors. The two protection regimes are simultaneously estimated with joint constraints. The results of the J-test consistently reject the homogeneous (perfect compe- tition) protection-for-sale model often adopted in previous literature and suggest a direction of improvement toward the proposed heterogeneous protection structure model.
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Bibliographic InfoPaper provided by Singapore Management University, School of Economics in its series Working Papers with number 18-2006.
Length: 32 pages
Date of creation: Aug 2006
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Other versions of this item:
- Pao-Li Chang & Myoung-Jae Lee, 2006. "Protection for Sale Under Monopolistic Competition : An Empirical Investigation," Microeconomics Working Papers 22061, East Asian Bureau of Economic Research.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-18 (All new papers)
- NEP-POL-2006-11-18 (Positive Political Economics)
- NEP-SEA-2006-11-18 (South East Asia)
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