How does non-market economy structure work as a trade barrier?

Saesin Oh, Dongwoo Lee and Sang-Kee Kim

Applied Economics Letters, 2023, vol. 30, issue 19, 2743-2748

Abstract: This study investigates the effect of a non-market economy structure on the duopoly competition in which a foreign private firm competes with a state-owned enterprise in a non-market economy. By comparing with Singh and Vives (1984) and Matsumura and Ogawa (2012), we find that the non-market economic structure can function as a trade barrier and cause foreign firms to face discriminatory competition. The transition from a non-market economy to a market economy may sacrifice social welfare, which implies no more Pareto improvement.

Date: 2023
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DOI: 10.1080/13504851.2022.2106029

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