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Global Value Chains and Unequal Exchange- Market Power and Monopoly Power

Author

Listed:
  • Deepankar Basu

    (Department of Economics, University of Massachusetts Amherst)

  • Ramaa Vasudevan

    (Department of Economics, Colorado State University.)

Abstract

We revisit the hypotheses of unequal exchange and deteriorating terms of trade in the specific context of import-intensive, export- led strategies of developing countries which rely on integration into GVCs for access to markets in developed countries using a stylized two-country two-commodity Classical- Marxian trade model. Two sources of asymmetry can be distinguished: market power arising from the competition between suppliers that depresses the prices at which the final good is supplied; and monopoly power arising from the lead firms control and ownership of intangible assets including brand and design. The model explores some implications of these two sources of asymmetry.

Suggested Citation

  • Deepankar Basu & Ramaa Vasudevan, 2021. "Global Value Chains and Unequal Exchange- Market Power and Monopoly Power," UMASS Amherst Economics Working Papers 2021-13, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2021-13
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    File URL: https://scholarworks.umass.edu/econ_workingpaper/310/
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    Cited by:

    1. Lundvall, Bengt-Åke, 2023. "Development strategies in a context of world system disorder," Lund Papers in Economic History 248, Lund University, Department of Economic History.

    More about this item

    Keywords

    Unequal Exchange; Global Value Chains; Classical Trade Model;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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