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Global Value Chains and Unequal Exchange- Market Power and Monopoly Power

Deepankar Basu () and Ramaa Vasudevan ()
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Deepankar Basu: Department of Economics, University of Massachusetts Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: We revisit the hypotheses of unequal exchange and deteriorating terms of trade in the specific context of import-intensive, export- led strategies of developing countries which rely on integration into GVCs for access to markets in developed countries using a stylized two-country two-commodity Classical- Marxian trade model. Two sources of asymmetry can be distinguished: market power arising from the competition between suppliers that depresses the prices at which the final good is supplied; and monopoly power arising from the lead firms control and ownership of intangible assets including brand and design. The model explores some implications of these two sources of asymmetry.

Keywords: Unequal Exchange; Global Value Chains; Classical Trade Model (search for similar items in EconPapers)
JEL-codes: F02 F23 O19 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com, nep-cwa, nep-hme, nep-ind, nep-int, nep-isf, nep-opm and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:ums:papers:2021-13

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