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Title: Gains from trade : competition and the factor market
Author: Wes, Marina
ISNI:       0000 0001 3566 0170
Awarding Body: London School of Economics and Political Science
Current Institution: London School of Economics and Political Science (University of London)
Date of Award: 1996
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How do international trade and economic integration alter competitive pressures in economies. Can economic integration increase welfare by alleviating factor market distortions. What are the precise channels through which trade triggers welfare gains. This thesis examines how economic integration can alter competitive pressures in both product and factor markets. Endogenising product market imperfections, the new trade theory highlighted a number of previously unrecognised sources of gains from trade. This thesis will suggest that further gains from trade can be derived by endogenising factor market imperfections. Although these gains have been commonly alleged to by practitioners, they have hardly been formalised. Chapter 2 empirically assesses the importance of the various channels through which procompetitive gains from trade may be attained. Using a panel of 2400 Mexican firms between 1984-1990, it is shown that markups fell with trade liberalisation. It is also suggested that liberalisation has increased total factor productivity of the firms in the sample. The remainder of the thesis is of a theoretical nature. Chapter 3 focuses on the market for intermediate inputs in the presence of hold-up. In a closed economy, a bilateral monopoly is operating and inefficiencies arise in both product and factor markets. As the economy opens up to trade, procompetitive effects suppress the margin between prices and marginal costs increasing allocative efficiency. If downstream firms become internationally mobile, productive gains may arise from increasing returns to scale and intensified competition in the input market. Chapter 4 focuses on the unionised labour market. If countries are symmetric, trade will increase competition in the product market raising labour demand. The effect on wages is ambiguous. If firms are internationally mobile, the threat of firm mobility reduces both wages and unemployment.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: International commerce & international trade