Trade in imperfectly competitive industries: the role of market size and consumer preferences

Abstract

This study presents theoretical and empirical analyses of market size and consumer preference asymmetries to examine the implications of trade and trade policies for imperfectively competitive food manufacturing sectors. The results show that the effects of trade reforms on imperfectly competitive product trade are counter intuitive if a significant portion of food trade is attributed to market size and preference asymmetries. For example, countries with smaller market gain relatively more from trade liberalization than countries with larger markets because export market opportunities are greater for small countries than for large countries.