Is Foreign Trade (Im)Perfectly Competitive?: An Analysis of the German Market for Banana Imports
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 2154
Many studies have been carried out that measure welfare effects of the newly adopted common policy on banana imports by the European Community. All these studies assume that foreign trade in bananas is characterized by perfect competition. However, if foreign trade in bananas is imperfectly competitive in structure, then the welfare predictions about the common banana policy may turn out to be incorrect. It is necessary, therefore, to empirically estimate the degree at market imperfection in the banana market. In this paper, we estimate the degree of market imperfection in the German market for banana imports using a structural econometric model. Based on the bootstrap procedure, we reject the hypothesis that this market is perfectly competitive in structure, but cannot reject the hypothesis that firms are engaged in Cournot-Nash behavior.
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