TY - JOUR
T1 - The Competitive Impact of International Trade
T2 - The Case of Import Liberalization of the Japanese Oil Product Market
AU - Nagaoka, Sadao
AU - Kimura, Fukunari
PY - 1999/12
Y1 - 1999/12
N2 - This paper analyzes the competitive impact of the recent import liberalization of the Japanese oil product market. In response to the import liberalization in March 1996, not only did the market price of gasoline decline sharply but also its domestic production kept rising and did not decline relative to imports. Moreover, its price fell substantially before the actual liberalization of the import. This paper demonstrates both theoretically and empirically that the theory of implicit cartel can explain such features of the impact of import liberalization very well. The paper also identifies the significantly positive welfare impact of such liberalization due to the expansion of supply in a market with a large tax wedge between price and cost and, possibly more importantly, due to the transformation of competitive conduct from unproductive investment for cartel-rent shifting into price cuts. J. Japan. Int. Econ., December 1999, 13(4), pp. 397-423. Hitotsubashi University; and Keio University. Copyright 1999 Academic Press. Journal of Economic Literature Classification Numbers: L40, F12, K21.
AB - This paper analyzes the competitive impact of the recent import liberalization of the Japanese oil product market. In response to the import liberalization in March 1996, not only did the market price of gasoline decline sharply but also its domestic production kept rising and did not decline relative to imports. Moreover, its price fell substantially before the actual liberalization of the import. This paper demonstrates both theoretically and empirically that the theory of implicit cartel can explain such features of the impact of import liberalization very well. The paper also identifies the significantly positive welfare impact of such liberalization due to the expansion of supply in a market with a large tax wedge between price and cost and, possibly more importantly, due to the transformation of competitive conduct from unproductive investment for cartel-rent shifting into price cuts. J. Japan. Int. Econ., December 1999, 13(4), pp. 397-423. Hitotsubashi University; and Keio University. Copyright 1999 Academic Press. Journal of Economic Literature Classification Numbers: L40, F12, K21.
KW - Implicit cartel
KW - Import liberalization
KW - Rent dissipation
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U2 - 10.1006/jjie.1999.0432
DO - 10.1006/jjie.1999.0432
M3 - Article
AN - SCOPUS:0347033149
VL - 13
SP - 397
EP - 423
JO - Journal of the Japanese and International Economies
JF - Journal of the Japanese and International Economies
SN - 0889-1583
IS - 4
ER -