Working Paper: CEPR ID: DP5135
Authors: Joseph Francois; Ian Wooton
Abstract: We examine interaction between goods trade and market power in domestic trade and distribution sectors. Theory suggests a linkage between service-sector competition and goods trade, one supported by econometrics involving imports of 22 OECD countries vis-à-vis 69 exporters. This points to linkages between market access conditions for goods and the structure of the service sector. Competition in services affects the volume of goods trade. Additionally, because of interaction between tariffs and competition, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Also, empirically service competition apparently matters most for exporters in smaller, poorer countries.
Keywords: GATS; market access; services; trade; strategic competition; policy; trade and competition; trade liberalization
JEL Codes: F12; F13; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| level of tariffs (F14) | volume of international trade (F10) |
| degree of competition in the domestic service sector (L89) | trade volumes (F10) |
| effects of service sector competition (F69) | trade volumes (F10) |
| market power exercised in domestic distribution sectors (D39) | optimal import tariff (F14) |