Abstract
In this paper we describe the structure which characterizes the Israeli import market, and analyze the implications of this structure for the expected results of the trade liberalization process underway in Israel. The study focuses on the phenomenon of sole-importerships. Our research has shown that this practice is pervasive for the products examined. In many cases this practice is accompanied by other practices, such as the import of a number of competing products by the same importer and the import of competing products by local manufacturers. We show that there are two primary reasons for the prevalence of this practice. First, this structure is often optimal from the perspective of the manufacturer. Second, the trade policies adopted by Israeli governments in the past have directly affected the frequency of this practice. We show that the prevalence of this practice can significantly weaken the expected positive consequences of the trade liberalization process for the level of competition in the Israeli market. The prevalence of this practice cannot be expected to diminish appreciably, since it is often optimal from the producers' point of view. Thus, it is more practical to combat the negative effects of this practice than to combat the practice itself. To this end, we recommend several changes in the Restrictive Trade Practices Law and suggest speeding up the reform process in the setting of product standards in order to decrease the market power of sole-importers.
Translated title of the contribution | The Structure of Imports and Trade Liberalization: The Phenomenon of Sole-Importerships |
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Original language | Hebrew |
Pages (from-to) | 267-283 |
Journal | Economic Quarterly |
Volume | 42 |
Issue number | 2 |
State | Published - 1995 |