Global Value Chains and Unequal Exchange: Market Power and Monopoly Power

Authors

Deepankar Basu, Department of Economics, UMass AmherstFollow
Ramaa Vasudevan, Department of Economics, Colorado State University

Working Paper Number

2021-13

Publication Date

2021

Abstract

We revisit the hypotheses of unequal exchange and deteriorating terms of trade in the specific context of import-intensive, export- led strategies of developing countries which rely on integration into GVCs for access to markets in developed countries using a stylized two-country two-commodity Classical- Marxian trade model. Two sources of asymmetry can be distinguished: market power arising from the competition between suppliers that depresses the prices at which the final good is supplied; and monopoly power arising from the lead firms control and ownership of intangible assets including brand and design. The model explores some implications of these two sources of asymmetry.

DOI

https://doi.org/10.7275/23745731

License

UMass Amherst Open Access Policy

Recommended Citation

Basu, Deepankar and Vasudevan, Ramaa, "Global Value Chains and Unequal Exchange: Market Power and Monopoly Power" (2021). Economics Department Working Paper Series. 310.
https://doi.org/10.7275/23745731