Market structure, trade liberalization and the GATS

In this paper, we examine the interaction between the different modes of market access commitments in services (cross-border and establishment), market structure, and regulation. In this context, we focus on the impact of improved domestic market access for a foreign-service provider on a domestic service market. We work with a model where the domestic industry is assumed to be imperfectly competitive and, as a result of domestic regulation, able to act as a cartel. We also examine the incentives for the domestic firms to accommodate the entry of the foreign firm by inviting it to join the cartel.