Markups, Market Imperfections, and Trade Openness : Evidence from Ghana

Markups, Market Imperfections, and Trade Openness : Evidence from Ghana

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...

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Main Author: Damoah, Kaku Attah
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2019
Subjects:
MARKET POWER
MARKET IMPERFECTION
TRADE OPENNES
WTO
LABOR MARKET
COMPETITIVENES
Online Access:http://documents.worldbank.org/curated/en/414481576075847938/Markups-Market-Imperfections-and-Trade-Openness-Evidence-from-Ghana
http://hdl.handle.net/10986/33023
id okr-10986-33023
recordtype oai_dc
spelling okr-10986-330232022-09-19T12:16:57Z Markups, Market Imperfections, and Trade Openness : Evidence from Ghana Damoah, Kaku Attah MARKET POWER MARKET IMPERFECTION TRADE OPENNES WTO LABOR MARKET COMPETITIVENES 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. 2019-12-13T21:53:06Z 2019-12-13T21:53:06Z 2019-12 Working Paper http://documents.worldbank.org/curated/en/414481576075847938/Markups-Market-Imperfections-and-Trade-Openness-Evidence-from-Ghana http://hdl.handle.net/10986/33023 English Policy Research Working Paper;No. 9079 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Ghana
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic MARKET POWER
MARKET IMPERFECTION
TRADE OPENNES
WTO
LABOR MARKET
COMPETITIVENES
spellingShingle MARKET POWER
MARKET IMPERFECTION
TRADE OPENNES
WTO
LABOR MARKET
COMPETITIVENES
Damoah, Kaku Attah
Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
geographic_facet Africa
Ghana
relation Policy Research Working Paper;No. 9079
description 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.
format Working Paper
author Damoah, Kaku Attah
author_facet Damoah, Kaku Attah
author_sort Damoah, Kaku Attah
title Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
title_short Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
title_full Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
title_fullStr Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
title_full_unstemmed Markups, Market Imperfections, and Trade Openness : Evidence from Ghana
title_sort markups, market imperfections, and trade openness : evidence from ghana
publisher World Bank, Washington, DC
publishDate 2019
url http://documents.worldbank.org/curated/en/414481576075847938/Markups-Market-Imperfections-and-Trade-Openness-Evidence-from-Ghana
http://hdl.handle.net/10986/33023
_version_ 1764477828139581440

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