Commitment to Reform and the Success of Service Trade Liberalization

Denise Konan and Ari Van Assche

No 331820, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: In this paper, we analyze how a country’s commitment to regulatory reform affects the success of its service trade liberalization. For this purpose, we set up a computational general equilibrium (CGE) model with a single imperfectly competitive service sector that in the benchmark is dominated by a domestic monopolist. Service trade liberalization is modelled as a two-stage game with incomplete information. In stage 1, a single license is allocated to a foreign service provider. In stage 2, the government chooses the market structure between the foreign entrant and domestic incumbent. In such a setting, the effect of service trade liberalization depends on three factors: (i) the license allocation mechanism; (ii) the adopted market structure; and (iii) the government’s perceived commitment to reform. We apply our model to a CGE model for Tunisia to estimate the magnitudes of these effects.

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 36
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331820

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