In this paper, we analyze how a country’s commitment to regulatory reform affects the success of its service trade liberalization. For this purpose, we set up a computational general equilibrium (CGE) model with a single imperfectly competitive service sector that in the benchmark is dominated by a domestic monopolist. Service trade liberalization is modelled as a two-stage game with incomplete information. In stage 1, a single license is allocated to a foreign service provider. In stage 2, the government chooses the market structure between the foreign entrant and domestic incumbent. In such a setting, the effect of service trade liberalization depends on three factors: (i) the license allocation mechanism; (ii) the adopted market structure; and (iii) the government’s perceived commitment to reform. We apply our model to a CGE model for Tunisia to estimate the magnitudes of these effects.