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Imports, entry, and competition law as market disciplines

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  • Kee, Hiau Looi
  • Hoekman, Bernard

Abstract

Since the early 1990s numerous countries have adopted or strengthened competition legislation. Kee and Hoekman investigate the impact of competition law on industry markups over time and across a large number of countries. They find both domestic and foreign competition to be major sources of market discipline in concentrated markets, but that the direct effect of competition law is insignificant. However, once allowance is made for the endogeneity of both domestic competiton (number of firms) and the adoption of a competition law, the authors find that competition laws have an indirect effect on equilibrium markups by promoting a larger number of domestic firms.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3031.

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Date of creation: 30 Apr 2003
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Handle: RePEc:wbk:wbrwps:3031

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Keywords: Water and Industry; Economic Theory&Research; Labor Policies; Environmental Economics&Policies; ICT Policy and Strategies; Environmental Economics&Policies; Economic Theory&Research; Water and Industry; ICT Policy and Strategies; Markets and Market Access;

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References

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  1. Hausman, Jerry A., 1983. "Specification and estimation of simultaneous equation models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 7, pages 391-448 Elsevier.
  2. Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," Working Paper Series rwp01-015, Harvard University, John F. Kennedy School of Government.
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  5. Levinsohn, J. & Petrin, A., 1999. "When Industries Become More Productive, Do Firms?: Investigating Productivity Dynamics," Working Papers 445, Research Seminar in International Economics, University of Michigan.
  6. repec:fth:michin:445 is not listed on IDEAS
  7. Susanto Basu & John G. Fernald, 1996. "Returns to scale in U.S. production: estimates and implications," International Finance Discussion Papers 546, Board of Governors of the Federal Reserve System (U.S.).
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  12. Hoekman, Bernard & Hiau Looi Kee & Olarreaga, Marcelo, 2001. "Markups, entry regulation, and trade - Does country size matter?," Policy Research Working Paper Series 2662, The World Bank.
  13. Levinsohn, J., 1991. "Testing the Imports-As-Market-Discipline Hypothesis," Working Papers 272, Research Seminar in International Economics, University of Michigan.
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  15. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
  16. Hoekman, Bernard & Saggi, Kamal, 2004. "International Cooperation on Domestic Policies: Lessons from the WTO Competition Policy Debate," CEPR Discussion Papers 4693, C.E.P.R. Discussion Papers.
  17. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
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Citations

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Cited by:
  1. Herv� Boulhol & Sabien Dobbelaere & Sara Maioli, 2009. "Imports as Product and Labour Market Discipline," Tinbergen Institute Discussion Papers 09-002/3, Tinbergen Institute.
  2. Hoekman, Bernard & Smarzynska Javorcik, Beata, 2004. "Policies Facilitating Firm Adjustment to Globalization," CEPR Discussion Papers 4692, C.E.P.R. Discussion Papers.
  3. Hervé Boulhol, 2005. "Why haven't price-cost margins decreased with globalization ?," Cahiers de la Maison des Sciences Economiques bla06007, Université Panthéon-Sorbonne (Paris 1).
  4. Bruce Blonigen & Benjamin H. Liebman & Justin R. Pierce & Wesley W. Wilson, 2010. "Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas," NBER Working Papers 16391, National Bureau of Economic Research, Inc.
  5. Bekkers, Eddy & Francois, Joseph, 2013. "Trade and industrial structure with large firms and heterogeneity," European Economic Review, Elsevier, vol. 60(C), pages 69-90.
  6. repec:dgr:uvatin:2009002 is not listed on IDEAS
  7. Patrick McCloughan & Seán Lyons & William Batt, 2007. "The Effectiveness of Competition Policy and the Price-Cost Margin: Evidence from Panel Data," Papers WP209, Economic and Social Research Institute (ESRI).
  8. Rosen Marinov, 2010. "Competitive Pressure in Transition: A Role for Trade and Competition Policies?," Journal of Industry, Competition and Trade, Springer, vol. 10(1), pages 1-31, March.
  9. Lee, Cassey, 2004. "Legal Traditions and Competition Policy," Centre on Regulation and Competition (CRC) Working papers 30697, University of Manchester, Institute for Development Policy and Management (IDPM).
  10. Clarke, George R. G., 2005. "Do government policies that promote competition encourage or discourage new product and process development in low and middle-income countries?," Policy Research Working Paper Series 3471, The World Bank.
  11. Lewis Evans and Patrick Hughes, 2003. "Competition Policy in Small Distant Open Economies: Some Lessons from the Economics Literature," Treasury Working Paper Series 03/31, New Zealand Treasury.

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