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Market Structure in Services and Market Access in Goods

Joseph Francois and Ian Wooton

IIIS Discussion Paper No. 80
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. JEL classification: F12, F13, F23
Keywords: market access, services trade, trade liberalization, competition policy, imperfect competition, GATS

Last updated 28 August 2014 by IIIS (Email).