Trade Policy and Imperfect Competition

The continuing momentum in establishing Preferential Trade Agreements (PTAs) has triggered my interest in investigating some important theoretical aspects of both multilateralism and regionalism. In particular, this Ph.D. thesis approaches these aspects by using models which include imperfect competition in commodity markets, product differentiation and strategic behavior on the part of the economic decision makers (taken here to be governments and firms). Features, that is, which are widespread in the world we live in.The First Chapter of this thesis, “Product Differentiation and the ‘Most Favored Nation’ Clause” aims at offering a richer insight on the reasons that lie behind the adoption of the MFN tariffs by trading countries in a world where the bulk of trade is in differentiated products. Furthermore, this chapter attempts to shed light on the discussion regarding the interpretation of the term “like products”, which appears in numerous places in GATT legislation, beginning from Article I, and has yet to be interpreted by WTO panels and the Appellate Body. The remaining three chapters of the thesis are guided by the idea that a principal may benefit from passing authority or power to an agent who is different than herself. Various examples of the delegation decision process one might find specifically in managerial, labor and public economics. The mainstream of the notion of delegation in international trade literature has been addressed in preferential agreements such as customs union. One of the distinguishing characteristics of customs unions is that member-states commit themselves in setting a common external tariff (CET) or a subsidy in their trade with non-member countries. However, by explicitly recognizing the strategic aspects of trade policies, a member-state may find to its advantage to delegate authority to set the external policy to its partner. The determination of the optimal policy maker in the union that sets this common trade policy is investigated in the remaining three chapters of my thesis.The Second Chapter of the thesis, “Harmony and Disagreement in Customs Union: the Role of Demand”, examines how the level of demand can influence the choice of the policy maker as well as the cohesion of a customs union.An interesting, probably, insight of this chapter that could partially be a policy recommendation is that in periods of recession that lead to a fall in demand the strains between the union members and, particularly, between the more and the less cost efficient ones increase. In such cases, intra-union transfers from the “rich” to the “poor” might be needed in order to secure the stability and the cohesion of the union, to the benefit of all. In the Third Chapter, “Delegation in a Tripartite Customs Union”, the analysis of the previous chapter is extended to investigate how the delegation decision is affected in a customs union composed of three, rather than two, countries that differ in terms of cost efficiency. The Fourth Chapter, “International Capital Mobility and Delegation in Customs Union” focuses on the so-called “deep regionalism”, namely a set of non-tariff measures in areas such as competition policy, environmental standards ,investment and capital mobility. The most important motivation that has led to this chapter is the realization that many PTAs include agreements of this kind. Another motivation was the absence in the customs union literature of a theoretical connection between capital tax harmonization and delegation decisions in a customs union. In particular, this chapter investigates how the issue of the delegation decision in a CU that decides unanimously the common capital tax system and the tax rate against non-member countries, could be knitted with the tax competition and tax harmonization literature.

Imperfect competition and pareto-improving strategic trade policy

Journal of International Economics ◽

10.1016/0022-1996(92)90009-9 ◽

1992 ◽

Vol 33 (3-4) ◽

pp. 363-371 ◽

Cited By ~ 6

Author(s):

Aslam H. Anis ◽

Thomas W. Ross

Keyword(s):

Trade Policy ◽

Imperfect Competition ◽

Strategic Trade Policy ◽

Strategic Trade ◽

Pareto Improving

Specification choice and robustness in CGE trade policy analysis with imperfect competition

Economic Modelling ◽

10.1016/j.econmod.2004.03.003 ◽

2004 ◽

Vol 21 (6) ◽

pp. 1065-1099 ◽

Cited By ~ 12

Author(s):

Dirk Willenbockel

Keyword(s):

Policy Analysis ◽

Trade Policy ◽

Imperfect Competition

Trade Policy and Imperfect Competition

International Economics ◽

10.1007/978-1-349-23320-5_13 ◽

1994 ◽

pp. 263-278

Author(s):

Bo Södersten ◽

Geoffrey Reed

Keyword(s):

Trade Policy ◽

Imperfect Competition

Trade policy under imperfect competition: The economics of Russian roulette

De Economist ◽

10.1007/bf01681902 ◽

1996 ◽

Vol 144 (2) ◽

pp. 223-258 ◽

Cited By ~ 1

Author(s):

Steven Brakman ◽

Charles Van Marrewijk

Keyword(s):

Trade Policy ◽

Imperfect Competition

Trade policy under imperfect competition Theoretical ambiguities — empirical regularities?

European Economic Review ◽

10.1016/0014-2921(89)90125-6 ◽

1989 ◽

Vol 33 (2-3) ◽

pp. 473-479 ◽

Cited By ~ 4

Author(s):

Victor D. Norman

Keyword(s):

Trade Policy ◽

Imperfect Competition ◽

Empirical Regularities

Regional trade agreements and the new theory of trade

Journal of International Trade Law and Policy ◽

10.1108/14770021111116133 ◽

2011 ◽

Vol 10 (1) ◽

pp. 49-63 ◽

Cited By ~ 1

Author(s):

Neelesh Gounder ◽

Biman Chand Prasad

Keyword(s):

International Trade ◽

Trade Policy ◽

Imperfect Competition ◽

Trade Agreements ◽

Regional Trade Agreements ◽

Trade Policies ◽

Regional Trade ◽

Policy Makers ◽

Content Type ◽

Gains And Losses

PurposeThe purpose of this paper is to explore the two issues of regional trade agreements (RTAs) and the new theory of international trade and draw conclusions for Pacific Island countries (PICs). The authors provide a deeper conceptual treatment of the consequences of RTAs and analyse the new theory of international trade to explore its implications for trade policy in PICs.Design/methodology/approachWith regard to RTAs, the argument is developed in the context of the conjecture that questions the benefits from adopting more open trade policies with neighbours while maintaining restrictive policies towards the rest of the world. The authors draw on international and regional analytical literature and on recent modelling work to review critically the possible gains and losses of RTAs for PICs. In the latter issue, the focus is on the roles of imperfect competition and scale economies and their relevance to PICs.FindingsFreeing up trade gradually and unilaterally and realizing the benefits of comparative advantage remains the best way to maximise welfare. PICs could be worse off under a complex system of overlapping RTAs and existence of RTAs by Australia and New Zealand outside the region has the possibility of marginalizing weak PICs economies.Practical implicationsPICs are currently at a critical juncture in terms of trade policy making with various trade agreements being thrown in the region and this paper has the capacity to provide some answers to policy makers on the approach to take.Originality/valueThe paper offers insights into regional trade agreements and the new theory of trade.

Two-Part Trade Policy under Imperfect Competition

Review of International Economics ◽

10.1111/1467-9396.00039 ◽

1997 ◽

Vol 5 (1) ◽

pp. 63-71 ◽

Cited By ~ 1

Author(s):

Timothy S. Fuerst ◽

Kyoo H. Kim

Keyword(s):

Trade Policy ◽

Imperfect Competition