Market Structure in Services and Market Access in Goods

We examine the interaction between trade in goods and market power in domestic trade and distribution sectors. Theory suggests a linkage between service-sector competition and goods trade, one supported by econometrics involving import patterns of 21 OECD countries. This points to significant linkages between effective market-access conditions for goods and the structure of the service sector. Competition in services affects the volume of goods trade. Additionally, because of interaction between tariffs and competition, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced, and are most important in the context of FTAs and customs unions. JEL CODES: F12, F13, F23