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Markups, Market Imperfections, and Trade Openness : Evidence from Ghana / Kaku Attah Damoah.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Damoah, Kaku Attah.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Markets.
- Competitiveness.
- International Economics and Trade.
- Labor Market.
- Labor Markets.
- Market Imperfection.
- Market Power.
- Social Protections and Labor.
- Trade Liberalization.
- Trade Openness.
- Trade Policy.
- World Trade Organization.
- WTO.
- Local Subjects:
- Access to Markets.
- Competitiveness.
- International Economics and Trade.
- Labor Market.
- Labor Markets.
- Market Imperfection.
- Market Power.
- Social Protections and Labor.
- Trade Liberalization.
- Trade Openness.
- Trade Policy.
- World Trade Organization.
- WTO.
- Physical Description:
- 1 online resource (41 pages)
- Other Title:
- Markups, Market Imperfections, and Trade Openness
- Place of Publication:
- Washington, D.C. : The World Bank, 2019.
- System Details:
- data file
- Summary:
- This paper investigates the impact of Ghana's World Trade Organization (WTO) accession on firm-level product and labor market imperfections. The paper exploits a rich dataset of firm-level information to estimate both markups and the degree of monopsony power enjoyed by manufacturing firms. The results indicate that price-cost margins declined while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggest that firms compress real wages to offset loss of market power in the product market due to increased international competition. This gives rise to an increase in the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The paper contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalization.
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