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Regulation, Market Structure and Service Trade Liberalization

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  • Denise Eby Konan
  • Ari Van Assche

Abstract

In this paper, we develop a method to quantify the importance of regulation and market structure on the success of trade liberalization. For this purpose, we incorporate a single imperfectly competitive service sector that can take on various market structures into a standard computational general equilibrium model. We apply our framework to analyze the impact of allowing a single foreign telecom provider to enter Tunisia. If the regulation environment guarantees competition, Tunisia's welfare can improve up to 0.65 percent. If a cartel is formed between the domestic incumbent and foreign entrant, however, Tunisia's welfare can drop up to 0.25 percent. Our results thus call for Tunisia among other developing countries to step up its procompetitive regulatory reforms while liberalizing its telecom sector. Dans ce papier, nous développons une méthode permettant de quantifier l'importance de la réglementation et de la structure des marchés sur la libéralisation du commerce et sur son succès. À ces fins, nous incorporons un secteur unique et imparfaitement compétitif pouvant intégrer différentes structures de marché dans un modèle standard de calcul d'équilibre général. Nous appliquons notre cadre d'analyse afin d'étudier l'impact de l'entrée d'un seul fournisseur étranger en Tunisie. Nous trouvons que si la réglementation du marché y garantit la compétition, le bien-être de la Tunisie peut augmenter de 0,65 %. Cependant, s'il y a formation d'un cartel entre le réseau domestique et l'entrant étranger, le bien-être de la Tunisie peut baisser de 0,25 %. Nos résultats démontrent que tout en libéralisant son secteur des télécommunications, la Tunisie bénéficierait de réformes visant des régulations pro-compétitives.

Suggested Citation

  • Denise Eby Konan & Ari Van Assche, 2006. "Regulation, Market Structure and Service Trade Liberalization," CIRANO Working Papers 2006s-18, CIRANO.
  • Handle: RePEc:cir:cirwor:2006s-18
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    References listed on IDEAS

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    1. Markusen, James & Rutherford, Thomas F. & Tarr, David, 2000. "Foreign direct investment in services and the domestic market for expertise," Policy Research Working Paper Series 2413, The World Bank.
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    1. repec:eee:chieco:v:47:y:2018:i:c:p:172-188 is not listed on IDEAS
    2. Amir Hadziomeragic & Malgorzata Jakubiak & Nermin Oruc & Wojciech Paczynski, 2007. "Regional Free Trade Agreements of Bosnia and Herzegovina: analysis and policy recommendations," CASE Network Reports 0069, CASE-Center for Social and Economic Research.
    3. Wagner, Ben, 2012. "Push-button-autocracy in Tunisia: Analysing the role of Internet infrastructure, institutions and international markets in creating a Tunisian censorship regime," Telecommunications Policy, Elsevier, vol. 36(6), pages 484-492.
    4. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2012. "CGE modeling of market access in services," Policy Research Working Paper Series 6106, The World Bank.
    5. Akkemik, K. Ali & Oğuz, Fuat, 2011. "Regulation, efficiency and equilibrium: A general equilibrium analysis of liberalization in the Turkish electricity market," Energy, Elsevier, vol. 36(5), pages 3282-3292.
    6. Chisari, Omar O. & Maquieyra, Javier & Romero, Carlos A., 2009. "Liberalization of trade in services: A CGE analysis for Argentina, Brazil and Uruguay," MPRA Paper 15336, University Library of Munich, Germany.
    7. repec:eee:enepol:v:107:y:2017:i:c:p:524-531 is not listed on IDEAS
    8. Christen, Elisabeth & Francois, Joseph & Hoekman, Bernard, 2013. "Computable General Equilibrium Modeling of Market Access in Services," Handbook of Computable General Equilibrium Modeling, Elsevier.

    More about this item

    Keywords

    service trade liberalization; regulation; market structure; imperfect competition; CGE (Computable General Equilibrium); CGE (équilibre général calculable); compétition imparfaite; libéralisation du commerce; réglementation; structure de marché;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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