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Korea's trade liberalization and consumer welfare

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Frame of Image ries, because it gives them access to a wider variety of products at lower prices than what their home country could supply. Despite Korea’s continuous trade liberalization over the years, however, it is criticized that Korean consumers have rarely realized welfare enhancement due to trade liberalization, pointing to no change or even an increase in consumer prices of imported goods for which tariff was reduced or eliminated through trade liberalization or effectuation of free trade agreements with other countries.
Trade
is generally believed that trade liberalization benefits consumers, there is only a handful of direct evidence on the gains from trade that particularly focuses on consumers’ welfare. In this report, we examine and estimate the welfare impacts of trade liberalization and increased trade on consumers. First, we investigate the trend of prices of imported consumer goods over time and then identify factors that might affect those prices. Second, we examine changes in product variety available in Korea due to trade liberalization and estimate how these changes in product variety affect Korean consumers’ welfare.
While it
Korea’s Trade Liberalization and Consumer Welfare
2
particular, within a constant elasticity of substitution (CES) framework, we develop a price index for import that is corrected for new and disappearing varieties by following Feenstra’s (1994) approach and using Korea’s trade data. New varieties lower unit costs, depending on their substitutabi


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Title Korea's trade liberalization and consumer welfare
Similar Titles
Material Type Reports
Author(English)

Suh, Kyo Jin; Chung, Chul; Lee, Jun Won

Publisher

Korea Institute for International Economic Policy

Date 2013
Series Title; No World Economy Update / 3-46
Pages 7
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Economy < Economic Conditions
Holding Korea Institute for International Economic Policy