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Trade liberalization and competitive behavior: A note assessing the evidence and the public policy implications

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  • Steven Globerman

    (Professor of Policy Analysis on the Faculty of Business Administration at Simon Fraser University in Burnaby, British Columbia)

Abstract

A strongly held piece of conventional wisdom is that liberalizing barriers to international trade stimulates increased competition, which, in tum, promotes lower domestic prices and increased efficiency. Against this background, competition policy authorities seem to be taking a relatively benign view of merger and acquisition activity that is presumed to be linked to trade liberalization. A stream of literature has recently emerged that raises questions about the magnitude and even the direction of the impact of trade liberalization on competition. This literature cautions against easing legislative restrictions on merger activity contingent on trade liberalization initiatives.

Suggested Citation

  • Steven Globerman, 1990. "Trade liberalization and competitive behavior: A note assessing the evidence and the public policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 9(1), pages 80-88.
    • Handle: RePEc:wly:jpamgt:v:9:y:1990:i:1:p:80-88
    DOI: 10.2307/3325114
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    References listed on IDEAS

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    1. J. David Richardson, 1988. "Empirical Research on Trade Liberalisation with Imperfect Competition: A Survey," OECD Economics Department Working Papers 58, OECD Publishing.
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    4. Thomas W. Ross, 1988. "Movements towards Free Trade and Domestic Market Performance with Imperfect Competition," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 507-524, August.
    5. Julio J. Rotemberg & Garth Saloner, 1986. "Quotas and the Stability of Implicit Collusion," NBER Working Papers 1948, National Bureau of Economic Research, Inc.
    6. Klein, Benjamin & Murphy, Kevin M, 1988. "Vertical Restraints as Contract Enforcement Mechanisms," Journal of Law and Economics, University of Chicago Press, vol. 31(2), pages 265-297, October.
    7. Hocking, Robin D, 1980. "Trade in Motor Cars between the Major European Producers," Economic Journal, Royal Economic Society, vol. 90(359), pages 504-519, September.
    8. Steven Globerman, 1988. "Addressing International Product Piracy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 497-504, September.
    9. Venables, Anthony J., 1985. "Trade and trade policy with imperfect competition: The case of identical products and free entry," Journal of International Economics, Elsevier, vol. 19(1-2), pages 1-19, August.
    10. Paul H. Rubin & Mark A. Cohen, 1992. "Politically Imposed Entry Barriers," Eastern Economic Journal, Eastern Economic Association, vol. 18(3), pages 333-344, Summer.
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    Cited by:

    1. Tarun Kabiraj & Manas Chaudhuri, 1999. "On the welfare analysis of a cross-border merger," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(2), pages 195-207.

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