Page 11 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.71, # 1, 2014, pp. 4-25

3. a. International trade markets

International trade may limit an effect of demonopolization of the national sector on

competition level in the limited market. When transport expenses and import barriers are few and

foreign companies compete successfully in the national market, demonopilization will not be

able to sufficiently increase the competition in the relevant market.

Barriers in international trade may emerge in different patterns. Import barriers include not

only tariffs and quotas; some regulations may facilitate or impede the trade. For instance, foreign

vendors usually insist on convertible currencies and the right for trade-oriented transfer of

benefits. Foreign manufacturers/producers of goods requiring a distribution network and a

technical maintenance need a legal system and a contractual law which will further enhance the

opportunities for awarding contracts with local distributors. Regulations on overseas investments

may deny ownership rights of certain production enterprises for foreigners. Foreign owners of

licenses are less willing to grant licenses to local producers in cases where an intellectual

property of a license owner is not protected efficiently. If these regulations are not sufficient,

competition of foreign producers will not be sufficiently effective for creation of a competition

environment among national monopolies.

“Temporary protectionism” which might seem attractive for countries subject to sweeping

economic changes has impact on decisions related to demonopolization. Temporary monopoly

prices may manipulate decisions about investment being in effect for a term that exceeds the

protectionism period. For example, a temporarily protected monopoly may make investments in

high-value productive forces intended for long-term period after the barriers have been removed.

When long-term distortions are more, it might be more expedient to demonopolize an enterprise

ensuring a given limited market for a product potentially sold in international trade (even if

11