Markups, Markets Imperfections, and Trade Openness: Evidence from Ghana

Kaku Attah Damoah

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: This paper investigates the impact of Ghana’s WTO accession on firm-level product and labour market imperfections. We exploit a rich dataset of firm-level information to estimate both markups and the degree of monopsony power enjoyed by manufacturing firms. Results suggest that price-cost margins declined, while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggests that firms compress real wages to offset loss of market power in the product market due to increased international competition. This results in an increase of the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The paper contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalisation.

Keywords: Markups; Market Imperfections; Trade Openness; Africa; Ghana (search for similar items in EconPapers)
JEL-codes: F13 L11 O14 O24 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2017
New Economics Papers: this item is included in nep-com and nep-int
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Related works:
Journal Article: Markups, Market Imperfections, and Trade Openness: Evidence from Ghana (2021)
Working Paper: Markups, Market Imperfections, and Trade Openness: Evidence from Ghana (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:frz:wpaper:wp2017_15.rdf

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