A Theoretical Study of International Effects of Deregulation

1998 Fiscal Year Final Research Report Summary

• Project/Area Number: 09630011
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Single-year Grants
• Section: 一般
• Research Field: 経済理論
• Research Institution: KOBE UNIVERSITY
• Principal Investigator: DEI Fumio Kobe University, School of Business Administration Professor, 経営学部, 教授 (90093541)
• Co-Investigator(Kenkyū-buntansha): TAWADA Mokoto Nagoya City University Department of Economics Professor, 経済学部, 教授 (10137028) ; YANO Makoto Keio University Department of Economics Professor, 経済学部, 教授 (30191175) ; KIKUCHI Toru Kobe University Department of Economics Lecturer, 経済学部, 講師 (40263363) ; NAKANISHI Noritsugu Kobe University Department of Economics Associate Professor, 経済学部, 助教授 (20237324) ; SHIMOMURA Koji Kobe University Research Institute of Economics and Business Administration Prof, 経済経営研究所, 教授 (60116217)
• Project Period (FY): 1997 – 1998
• Keywords: deregulation / balance of payments / international trade

Research Abstract

This research has produced the following two papers : "Trade Imbalance and Domestic Market Competition Policy" by Makoto Yano and "A Trade Model with Vertical Production Chain and Competition Policy in the Downstream Sector, " by Makoto Yano and Fumio Dei.
The first paper investigates the effect of a country's suppression of competition in its market for non-tradables under the assumption that the initial equilibrium is stationary. It is demonstrated that if competition is suppressed in a small country, the country's trade surplus increases in the short run. Because this creates an excess demand for future tradables. in the large-county case, it affects the relative price between present and future tradables. It is shown in a two-country model that this price change has the effect of redistributing real wealth from the country whose trade account is in deficit to that whose trade account is in surplus.
In the second paper, we build a trade model that renders tractable the process in which imperfect competition in a country's distribution sector affects the rest of the world through international trade. For this purpose. we view internationally-traded goods as middle products in the vertical chain of production, produced upstream and transformed into final consumption goods downstream. Using that model. we demonstrate that suppression of competition in a country's downstream sector may serve as a beggar-thy-neighbor policy, increasing that country's own utility while reducing that of its trading partner countries.