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The Division and Size of Gains from Liberalization of Service Networks

Author

Listed:
  • Keshab Bhattarai
  • John Whalley
Abstract
This paper emphasizes the different nature of cross border liberalization in network related services, such as telecoms, compared to liberalization in goods. In the presence of network externalities, it argues that if two disjoint country service networks involving a small and large country are connected as part of international liberalization, the per capita gain for the small country from access to a large network will be large, and the per capita gain for the large country will be small. Benefits of liberalization in network related serv ices, unlike goods, are more likely to be approximately equally divided between large and small countries than is true of trade in goods, where benefits accrue disproportionately to the small country. We also argue that non-cooperation in network related services trade may involve more extreme retaliation than suggested for trade in goods from the optimal tariff literature, so that relative to a non-cooperative outcome, gains from liberalization in network related services become larger than from liberalization in goods. An empirical implementation of global telecoms liberalization for the US, Europe, Canada, and the Rest of the World using the framework developed in the paper shows larger gains to larger regions, consistent with the theme of the paper that goods and services liberalization differ.

Suggested Citation

  • Keshab Bhattarai & John Whalley, 1998. "The Division and Size of Gains from Liberalization of Service Networks," NBER Working Papers 6712, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6712
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    References listed on IDEAS

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    Cited by:

    1. John Whalley, 2008. "Globalisation and Values," The World Economy, Wiley Blackwell, vol. 31(11), pages 1503-1524, November.
    2. John Whalley, 2004. "Assessing the Benefits to Developing Countries of Liberalisation in Services Trade," The World Economy, Wiley Blackwell, vol. 27(8), pages 1223-1253, August.
    3. Manish Pandey & John Whalley, 2009. "Social networks and trade liberalization," Applied Economics Letters, Taylor & Francis Journals, vol. 16(17), pages 1747-1749.
    4. Ajitava Raychaudhuri & Prabir De, 2007. "Assessing Barriers to Trade in Education Services in Developing Asia - Pacific Countries:An Empirical Exercise," Working Papers 3407, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    5. Bhattarai K., 2001. "Welfare Gains to UK from a Global Free Trade," European Research Studies Journal, European Research Studies Journal, vol. 0(3-4), pages 55-72, July - De.
    6. John Whalley, 2003. "Liberalization in China's Key Service Sectors Following WTO Accession: Some Scenarios and Issues of Measurement," NBER Working Papers 10143, National Bureau of Economic Research, Inc.
    7. Iris Claus & Les Oxley & Hejing Chen & John Whalley, 2014. "China'S Service Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 746-774, September.
    8. Manders, Ton & Bollen, Johannes & Dave, Rutu, 2007. "Trade sanctions and Climate Policy," Conference papers 331617, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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