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Commitment to Reform and the Success of Service Trade Liberalization

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  • Konan, Denise Eby
  • Van Assche, Ari

Abstract

In this paper, we analyze how a country’s commitment to regulatory reform affects the success of its service trade liberalization. For this purpose, we set up a computational general equilibrium (CGE) model with a single imperfectly competitive service sector that in the benchmark is dominated by a domestic monopolist. Service trade liberalization is modelled as a two-stage game with incomplete information. In stage 1, a single license is allocated to a foreign service provider. In stage 2, the government chooses the market structure between the foreign entrant and domestic incumbent. In such a setting, the effect of service trade liberalization depends on three factors: (i) the license allocation mechanism; (ii) the adopted market structure; and (iii) the government’s perceived commitment to reform. We apply our model to a CGE model for Tunisia to estimate the magnitudes of these effects.

Suggested Citation

  • Konan, Denise Eby & Van Assche, Ari, 2009. "Commitment to Reform and the Success of Service Trade Liberalization," Conference papers 331820, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331820
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    1. Hans van Meijl & Frank van Tongeren, 2002. "The Agenda 2000 CAP reform, world prices and GATT--WTO export constraints," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(4), pages 445-470, December.
    2. Martin Banse & Hans van Meijl & Andrzej Tabeau & Geert Woltjer, 2008. "Will EU biofuel policies affect global agricultural markets?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 35(2), pages 117-141, June.
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