Paying the Price: The Costs of Fragmented International Markets

by Scott Bradford, Robert Z. Lawrence, Scott C. Bradford

Overview

Scott C. Bradford and Robert Z. Lawrence use the underlying data from purchasing power parity surveys to estimate the potential benefits from fully integrating goods markets among major OECD countries. These data are particularly useful because they are comprehensive, and every effort has been made to ensure that they are comparable. Input-output tables are used to eliminate distribution margins from final goods prices and thereby provide estimates of ex-factory prices. Price differentials have been taken as measures of barriers, and the welfare effects of eliminating these barriers have been estimated in a general equilibrium model. The study also provides insights into the relative openness of individual OECD countries to the world economy and the degree to which Europe has become a single market.

Product Details

ISBN-13:	9780881323498
Publisher:	Peterson Institute for International Economics
Publication date:	02/10/2004
Pages:	200
Product dimensions:	6.08(w) x 9.00(h) x 0.23(d)
Age Range:	18 Years

About the Author

Scott C. Bradford was a Visiting Fellow at the Institute. He is an assistant professor at the department of economics, Brigham Young University. His research interests include international trade, political economy, and the Japanese economy. His work has appeared in The American Economic Review, The Review of Economics and Statistics, and the Journal of International Economics.

Robert Z. Lawrence was a senior fellow and also the Albert L. Williams Professor of Trade and Investment at the John F. Kennedy School of Government at Harvard University. He served as a member of President Clinton's Council of Economic Advisers from 1999 to 2000. He was the New Century Chair as a nonresident senior fellow at the Brookings Institution between 1997 and 1998.

Table of Contents

	Preface	ix
	Acknowledgments	xiii
1	Introduction	1
	Methodological Approach	4
	Principal Results	6
	Some Caveats	11
Appendix 1.1	Does Price Equalization Improve Welfare?	13
2	Measuring Barriers and the Benefits of Integration: Existing Studies	17
	Approaches to Measuring Trade Barriers	17
	Welfare Effects	25
3	Fragmentation among OECD Countries	27
	Data Issues	27
	Our Approach	28
	Consumer Prices	32
	Producer Prices	34
	Fragmentation Measures	36
	European Integration	40
	US-Canada Integration	46
	Japanese Openness	49
	Concluding Comments	55
4	The Welfare Effects of Integration	57
	Welfare Analysis	57
	Winners and Losers	63
	Additional Description of the Model and Methodology	66
Appendix 4.1	Confidence Intervals	73