This paper discusses the impact of foreign direct investment (FDI) on market entry and welfare. It assumes that firms may enter markets in the first period as national firms only. In the second period, however, FDI is possible. The paper demonstrates that FDI reduces market entry because equilibrium profits in the second period decline with a decrease in the fixed cost of FDI. Therefore, compar...

The study attempts to analyse the economy-wide impact of Indo-Pacific alliance between India and rest 45 participating members using computable general equilibrium (CGE) model. We introduce four simulation scenarios in first scenario is one which bilaterally liberalises trade terms both tariffs liberalisation alone then removal reduction non-tariff barriers together with all countries region. s...

We study the role of the quality of institutions as a determinant of the location of FDI, using bilateral FDI stocks from OECD countries around the world. While the literature has placed special emphasis on the role of corruption on FDI, we explore a wider range of institutional aspects. We find that better institutions have overall a positive and significant effect on FDI. Especially, unpredic...

This paper investigates the implications for international markets of the existence of retailers/wholesalers with market power. Two main results are shown. First, in the presence of buyer power trade liberalization may lead to retail market concentration. Due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky, thus reversing the standard e¤e...

In this paper, whether markets are integrated or segmented is endogenous and is determined by the interaction of demand parameters, tariffs, transportation costs, and arbitrage. Given certain restrictions, it is shown, in equilibrium, that policy makers choose tariffs to segment markets. The effects of trade liberalization (reducing all tariffs to zero) in an endogenous market structure framewo...

We develop a model of vertical pricing in which an original manufacturer sets wholesale prices in two markets integrated at the distributor level by parallel imports (PI). In this context we show that if competition policy requires uniform wholesale prices across locations it would push retail prices toward convergence as transportation costs fall. However, these retail prices could be higher t...

This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the...

This paper examines the welfare implications of an existence of free trade agreements (FTAs) and customs unions (CUs) in the GATT system, in the presence of cross-foreign ownership among countries. In particular, two GATT regimes are analyzed: a pure GATT regime without any regional free trade agreements, and modified GATT regime with either an FTA or a CU. This paper argues that, when foreign ...

This paper analyzes the pattern of provincial economic integration in China for the period 1991−98 by means of an errorcomponents model that decomposes provincial sectoral real valueadded growth into common national effects, industry-specific effects and province-specific effects. We find significant comovements in the long run although province-specific factors still account for one-third of t...

There is a continuing debate about whether international trade is responsible for the observed skilled-unskilled wage gap. In this paper we present a general equilibrium trade model with differentiated goods. We begin with an analytical model and show how changes in relative factor returns can be decomposed into changes in commodity prices, changes in the trade balance, and changes in the facto...