Competition, Agricultural Trade Reform and Developing Countries

Abstract

In this paper, we consider the potential impact of market power on the likely effects of trade reform and how this may impact on developing country exporters. The emphasis is on trade reform in agricultural markets, one of the principal features of the Doha Round negotiations, and we discuss the mechanisms via which market power will matter for agricultural markets even if those markets themselves are competitive. Using results from a calibrated theoretical model, we show that the existence of downstream market power in vertical chains is likely to dissipate the potential benefits that would accrue to developing country agricultural exporters following trade reform.