Journal article
Preferential Trade Agreements, Market Power, and Product Differentiation
Journal of economic integration, v 19(1)
01 Mar 2004
Abstract
Preferential trade agreements (PTAs) usually result in increased trade amongst member countries and lower prices within the PTA. Thus the markets are assumed to be ``more competitive'' because lower prices are taken to imply ``decreased market power'' due to a reduction in price-cost margins. In this paper we empirically examine the relationship between changes in market power and product differentiation within the context of a duopoly framework with restricted entry. Using industry level trade data from the EEC we show that the formation of a PTA may increase the market power of PTA-exporters and lower the market power of non-PTA exporters. In addition, we show that these market power are more pronounced for less differentiated products.
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Details
- Title
- Preferential Trade Agreements, Market Power, and Product Differentiation
- Creators
- Paul E Jensen - Drexel University, Bennett S. LeBow College of BusinessVibhas Madan - Drexel University, Bennett S. LeBow College of Business
- Publication Details
- Journal of economic integration, v 19(1)
- Publisher
- Center for International Economics, Sejong Institution
- Number of pages
- 20
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Bennett S. LeBow College of Business
- Web of Science ID
- KJD:ART000942890
- Other Identifier
- 991020172700904721