Measuring competition in services markets with pass-through and speed of adjustment
Making trade work for all and harnessing popular support for openness to trade depends
on consumers benefitting from lower prices and broader product variety. The present
study reveals that those benefits depend on competition in services markets, in particular
in telecommunication. These findings result from employing an industrial organisation
framework to estimate the transmission of prices from the world market to consumers
of certain services in local markets (distribution, transport, and financial services).
The OECD Services Trade Restrictiveness Index (OECD STRI) is used to explore the relationship
between the pass-through rate of input prices to consumer prices and policy measures
that capture the openness and strength of competition in services markets. The OECD
STRI in telecommunications is found to be associated with a more complete and faster
pass-through of prices in all markets studied. The results also illustrate the crucial
role played by the internet in allowing for price comparisons that generate competitive
pressure on distributors.
Available from December 01, 2021
In series:OECD Trade Policy Papersview more titles