infonet-economy

Employing an approach devised by Goldberg and Knetter (1999), we estimate whether European exporters exercised market power in selected East Asian markets during 1989- 2004. We find that in one-third of product lines considered here European firms exercised market power in East Asian markets for manufactured goods. Exporters from the United Kingdom were able to pass-through exchange rate fluctuations more often than French and German rivals. Of the four East Asian nations considered in this study, Thailand seems to be the most vulnerable to non-competitive pricing by foreign firms. Given that Thailand is known to have a weak competition regime, our result suggests a link between competition policy regimes and the gains from international trade. Korea is least vulnerable, a finding that is interesting given its strong (by regional standards) competition law enforcement regime.