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.
The enforcement record of the 1990s has demonstrated that international private cartels are neither relics of the past nor do they always fall quickly under the weight of their own incentive problems. Of a sample of forty cartels prosecuted by the United States and European Inion in the 1990s, twenty-four cartels lasted at least four years. And for the twenty of the cartels in this sample where sales data are available, the annual worldwide sales in the affected products exceeded US$30 billion. Prevailing national competition policies are oriented towards addressing harm done in domestic markets, and in some cases merely prohibit cartels without taking strong enforcement measures. In this paper we propose a sequence of reforms to national policies and to international cooperation that will strengthen the deterrents against international cartels. Furthermore, aggressive prosecution of cartels must be complemented by vigilance in other areas of competition policy. If not, firms will respond to the enhanced deterrents to cartelisation by merging or by taking other measures that lessen competitive pressures.
We examine whether two important theories of trade, the Heckscher- Ohlin theory and the increasing returns theory, can account for the empirical success of the so-called gravity equation. Since versions of both theories can predict this equation, we tackle the model identi- fication problem by conditioning bilateral trade relations on factor endowment differences and on the share of intraindustry trade. Only for large differences in factor endowments does the Heckscher-Ohlin model predict perfect production specialization in different countries as well as the gravity equation, and trade is purely in goods produced with different factor intensities. Our empirical analysis yields three findings. First, the predictions of the perfect specialization versions of both theories are rejected by the data and so are unlikely explanations for the empirical success of the gravity equation. Second, a model of imperfect specialization that includes both increasing re-turns and factor endowments as sources of trade has a mixed performance: it correctly predicts production of more differentiated goods when the level of intraindustry trade is greater; however, the predicted link to factor proportions is tenuous. Third, the predictions of a model with imperfect specialization that relies solely on differences in factor endowments find support in the data. These results suggest that factor endowments and increasing returns explain different components of the international variation of production patterns and trade volumes.
This paper summarises our efforts to date to assemble a comprehensive database of allegations of anti-competitive practices made in Sub-Saharan Africa publications, principally in newspapers and other periodicals. Although the findings from this approach must be interpreted with care, we believe this paper represents the first comprehensive attempt to assess the prevalence of different types of anti-competitive practices in Sub-Saharan Africa. So far we have located 120 distinct allegations of anti-competitive practices in 68 lines of business in 12 African nations since 1995. By a large margin the most frequent allegation concerns cartels, especially outside of South Africa. Allegations against foreign firms, some of which are African, range between a quarter and two-fifths of the total number of allegations, suggesting that plenty of domestic firms are the subject of allegations too. There are 12 lines of business where allegations are made in more than one Sub-Saharan African country. Many of those lines of business directly affect the well-being of the poor, those employed in the agricultural sector, and small business.
The decision not to launch negotiations in the WTO on three of the Singapore Issues in the so-called July 2004 package provides an opportunity to revisit the knowledge base upon which proposals for further international collective action may be drawn. This paper examines the available evidence on public procurement practices in developing countries that could be relevant to further multilateral rule making on state purchasing. Although there is considerable agreement on ends (efficient, non-corrupt, and transparent public purchasing systems), little information is available on means and, in particular, on the effective and replicable strategies that developing countries can adopt to improve their public procurement systems. A concerted effort to substantially add to the knowledge base on public procurement reforms in developing countries, through targeted research and international exchange of information on implemented procurement policies and outcomes, is critical to identifying areas where further binding multilateral disciplines may be beneficial.
