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Market-Discipline Effects Of Trade Liberalization: Micro-Level Evidence From Ecuador , 1997-2003

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  • Wong, Sara A.

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Abstract

This paper analyses pro-competitive effects of increased trade openness in the manufacturing industry in Ecuador. The data comes from the survey of manufacturing and mining industries in Ecuador for the years 1997-2003. Estimation procedures on both industry- and establishment-level data try to identify trade policy effect on price-cost margins, using import penetration as the trade variable, and controlling for a number of industry-specific effects that may affect profitability. The results suggest that there has been a market-discipline effect of trade liberalization in Ecuador: there is a reduction in price-cost margins when import penetration increases, especially in manufacturing establishments with larger market shares.

Suggested Citation

  • Wong, Sara A., 2007. "Market-Discipline Effects Of Trade Liberalization: Micro-Level Evidence From Ecuador , 1997-2003," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(2), pages 121-134.
  • Handle: RePEc:eaa:aeinde:v:7:y:2007:i:2_10
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    More about this item

    Keywords

    market structure; trade liberalization; micro-level data; Ecuador;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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