Trade in imperfectly competitive industries: the role of market size and consumer preferences

Abstract

This study presents theoretical and empirical analyses of market size and consumer preference asymmetries to examine the implications of trade and trade policies for imperfectively competitive food manufacturing sectors. The results show that the effects of trade reforms on imperfectly competitive product trade are counter intuitive if a significant portion of food trade is attributed to market size and preference asymmetries. For example, countries with smaller market gain relatively more from trade liberalization than countries with larger markets because export market opportunities are greater for small countries than for large countries.

The Effects of Tariff Policy under the Fixed Exchange Rate Regime

“…So in the 1980s, literatures where the effects of tariff shocks from a view of dynamic analysis began to emerge, such as a series of literatures displayed by Eichengreen (1981), Razin andSvensson (1983), Van Wijnbergen (1987), Edwards and Van Wijnbergen (1987) and Roldos (1991), but these literature all used perfectly competitive market structure as the basis of analysis in order to simplify the analysis, therefore, they also faced a situation that model assumptions did not match with the reality, resulting in problems of lack of credibility of theoretical analysis. So further, Rama (1993), Fender and Yip (1994), Bettendorf and Heijdra (1999), Devadoss and Lanclos (2000) and Sen (2001) turned the settings of market structure into a more realistic assumption with imperfectly competitive market to analyze the effects of the tariff shocks. At the same time, micro-foundation also was the trend of research.…”