Trade liberalization benefits consumers because it gives them access to a larger number and a wider variety of products, at lower prices, than their home country could supply. The principals of comparative advantage and specialization are well known. Competition from the increased availability of imported goods to domestic consumers also forces domestic firms to offer competitive prices, to improve production efficiency, and to innovate. Trade liberalization also presents domestic firms the opportunity to export their products and services to other countries, stimulating domestic growth.
While consumers as a whole are winners from free trade through lower prices and greater varieties, however, certain groups such as displaced workers in the import competing sectors are adversely affected due to increased imports. Much of the existing literature concerning trade liberalization focuses on the impact of trade on aggregate variables, such as the growth of GDP and GDP per capita, or net welfare effect on the economy as a whole. Although there is a general recognition that trade liberalization benefits consumers, there is only a handful of empirical research that investigate the direct impact of trade liberalization on consumers.
In this study, we examine the economic impacts of trade liberalization and estimate the impact of increased trade on the consumer welfare. In particular, within a CES framework, we develop a price index for import that is corrected for new and disappearing varieties, by employing Feenstra (1994)'s approach and using Korea’s trade data. New varieties lower the unit-costs depending on their substitutability with other varieties and their expenditure shares. Further, a case study on major consumer goods that are imported by Korea was conducted in this paper. We have investigated the marketing margin of these consumer goods from the border to final consumers and estimated the margin stage by stage for each marketing channel. (The rest is omitted.)
- 무역자유화 효과의 실증분석과 정책 대응(Empirical analysis of trade liberalization)
- Suh, Jin Kyo; Chung, Chul; Lee, Joun Won; Jeong, Yoon Seon서진교; 정철; 이준원; 정윤선
- 대외경제정책연구원(Korea Institute for International Econom
무역자유화 효과의 실증분석과 정책 대응(Empirical analysis of trade liberalization)
소비자후생을 중심으로(The benefits to Korean consumers)
서울(Seoul):대외경제정책연구원(Korea Institute for International Econom
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Macroeconomics
Economy < Trade
|Holding||대외경제정책연구원(Korea Institute for International Econom|