Abstract
This paper examines the dynamic impact of trade liberalization on productivity, market competition, and scale efficiency using a panel data of 36 Korean manufacturing industries over nine subperiods from 1966 to 1988. By accounting for both imperfect competition and non-constant returns, trade liberalization is shown to improve productivity performance, increase competition and promote scale efficiency. Quota protection (QR) had a more significant impact than price protection measures on market structure (as reflected in price-marginal cost markups and scale efficiency), vindicating a well-known theoretical proposition about non-equivalence of different trade policy (TP) instruments in imperfect competition.
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