Multilateral Trade Liberalization in Services

Discussion Paper No. 378

37 Pages Posted: 6 Nov 2003

See all articles by Drusilla K. Brown

Drusilla K. Brown

Tufts University - Department of Economics

Alan V. Deardorff

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan at Ann Arbor - Department of Economics

Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics

Date Written: July 6, 1995

Abstract

We examine the importance of various characteristics of services for the modelling of the effects of trade liberalization in services. We consider first the characteristics that our own computable general equilibrium (CGE) modelling framework has been designed to address: variety, scale, and competition. Modifying it somewhat so as to distinguish the separate roles of these characteristics, we find the characteristics to be relatively unimportant for the conclusions that one reaches about the effects of trade liberalization on the economy. We then consider other characteristics that may distinguish services from goods, and ask whether these also need to be taken into account in such modelling exercises. With one exception we conclude that these characteristics are unlikely to play an important role in future models of trade liberalization. The one exception is a characteristic identified by Ethier and Horn (1991), who saw producers of services as specializing their products to the particular needs of their customers. While it does not seem feasible at this time to incorporate this feature into a manageable CGE framework, we believe that it could have interesting and important implications for our understanding of the effects of trade liberalization if it were ever done.

JEL Classification: F10, F14

Suggested Citation

Brown, Drusilla K. and Deardorff, Alan V. and Stern, Robert M., Multilateral Trade Liberalization in Services (July 6, 1995). Discussion Paper No. 378, Available at SSRN: https://ssrn.com/abstract=91388 or http://dx.doi.org/10.2139/ssrn.91388

Drusilla K. Brown (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
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Alan V. Deardorff

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
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United States

University of Michigan at Ann Arbor - Department of Economics ( email )

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Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
313-764-2373 (Phone)
313-763-9181 (Fax)

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