Trade in Services and Market Structure

Even though the share of trade in services in total world trade is smaller than the share of services sector itself in the output of most countries, it is rapidly increasing. Due to high relatively to goods trade barriers, it is expected that global welfare gains to be achieved after services trade liberalization could be substantial. In particular, the services trade is expected to bring significant benefits to developing countries, where barriers are the highest. Consequently, this book studies the impact of services trade liberalization as well as the determinants of investments in services in developing countries. It focuses on producer and distribution services that play a key role in determining the quality and price of consumer goods. Intrinsic heterogeneity of services and the presence of increasing returns to scale are the most straightforward indications of imperfectly competitive market structure in services sector. Therefore, this book also studies the ways of economic modeling of features specific to services.