Trade in Intermediate Producer Services under Imperfect Competition
AbstractIn this paper a stylized CGE model is constructed to study the impact of liberalization of barriers for foreign providers of intermediate producer services under imperfect competition on the welfare, the downstream industry output, the prices of the factors of production and the pattern of trade. An attempt is made at incorporating oligopoly market structure into the services sector within general equilibrium model. Consequently, a model with firms making output conjectures about domestic and foreign rivals is adopted. The case of a small developing country with less efficient services sector relative to the foreign firms is assumed. In this framework, interaction and the relative significance of mechanisms resulting from the love of variety, anti and pro competitive and the efficiency effects on the outcomes of the services liberalization is analyzed. It is found that the liberalization services trade might be negative in terms of welfare and downstream industry expansion even if the profits of the foreign firms are not shifted abroad. This represents the evidence of dominant anticompetitive effect. It is therefore important to take into consideration the underlying market structure while liberalizing services trade.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by FIW in its series FIW Working Paper series with number 020.
Date of creation: Jan 2009
Date of revision:
Contact details of provider:
Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John Whalley, 2003.
"Assessing the Benefits to Developing Countries of Liberalization in Services Trade,"
NBER Working Papers
10181, National Bureau of Economic Research, Inc.
- John Whalley, 2004. "Assessing the Benefits to Developing Countries of Liberalisation in Services Trade," The World Economy, Wiley Blackwell, vol. 27(8), pages 1223-1253, 08.
- Mattoo, Aaditya & Rathindran, Randeep & Subramanian, Arvind, 2001.
"Measuring services trade liberalization and its impact on economic growth : an illustration,"
Policy Research Working Paper Series
2655, The World Bank.
- Mattoo, Aaditya & Rathindran, Randeep, 2006. "Measuring Services Trade Liberalization and Its Impact on Economic Growth: An Illustration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 64-98.
- Shoven,John B. & Whalley,John, 1992.
"Applying General Equilibrium,"
Cambridge University Press, number 9780521266550, October.
- Haaland, Jan I. & Norman, Victor D, 1992. "Global Production Effects of European Integration," CEPR Discussion Papers 669, C.E.P.R. Discussion Papers.
- Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
- Michael Gasiorek & Alasdair Smith & Anthony J. Venables, 2002. "The Accession of the UK to the EC: A Welfare Analysis," Journal of Common Market Studies, Wiley Blackwell, vol. 40(3), pages 425-447, 09.
If references are entirely missing, you can add them using this form.