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Imperfect Competition, Economies of Scale and Trade Liberalisation in Tunisia - A Comparative Analysis Using a Computable General Equilibrium Model (CGEM)

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  • Ferjani, Ali
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    Abstract

    Within a multi-sectoral general equilibrium framework, we explicitly model either competitive or Cournot oligopolistic commodities market structures. The model is used to assess the impact of trade liberalization on Tunisia economy. We show that the results are different from those obtained with perfect competition in terms of sectors allocations, but also mainly in terms of welfare. It is found that the trade liberalization improves welfare in all cases, and these gains are the most important with oligopoly. The existence of imperfection competition will be beneficial if the local producers profit from trade liberalization to decrease their production prices and to increase their production level. The outcome shows that the traditionally export-oriented sectors will cope with the liberalisation without any problems. In opposition the sectors that are usually more protected against foreign competition like the agricultural sector will suffer. The most unfortunate effects refer to public budget equilibrium. The fiscal reform proves to be an important element of every complementary domestic policy of the commercial liberalization.

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    Bibliographic Info

    Article provided by Swiss Society for Agricultural Economics and Rural Sociology in its journal Agrarwirtschaft und Agrarsoziologie/ Economie et Sociologie Rurales.

    Volume (Year): (2003)
    Issue (Month): 1 ()
    Pages:

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    Handle: RePEc:ags:agrarw:31998

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    Web page: http://www.sga-sse.ch/
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    Keywords: International Relations/Trade;

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    1. de Melo, Jaime, 1988. "Computable general equilibrium models for trade policy analysis in developing countries: A survey," Journal of Policy Modeling, Elsevier, vol. 10(4), pages 469-503.
    2. Jaime de Melo & David Roland-Holst, 1991. "Industrial Organization and Trade Liberalization: Evidence from Korea," NBER Chapters, in: Empirical Studies of Commercial Policy, pages 287-310 National Bureau of Economic Research, Inc.
    3. Mercenier, J., 1992. "Completing the European Internal Market: A General Equilibrium Evaluation Under Alternative Market Structure Assumption," Cahiers de recherche 9208, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
    4. de Melo, Jaime & Panagariya, Arvind & Rodrik, Dani, 1993. "The new regionalism : a country perspective," Policy Research Working Paper Series 1094, The World Bank.
    5. Markusen, James R. & Venables, Anthony J., 1996. "The Theory of Endowment, Intra-Industry and Multinational Trade," CEPR Discussion Papers 1341, C.E.P.R. Discussion Papers.
    6. Smith, Alasdair & Venables, Anthony J., 1988. "Completing the internal market in the European Community : Some industry simulations," European Economic Review, Elsevier, vol. 32(7), pages 1501-1525, September.
    7. Harrison, Glenn W & Rutherford, Thomas F & Tarr, David G, 1997. "Quantifying the Uruguay Round," Economic Journal, Royal Economic Society, vol. 107(444), pages 1405-30, September.
    8. Devarajan, Shantayanan & Rodrik, Dani, 1991. "Pro-competitive effects of trade reform : Results from a CGE model of Cameroon," European Economic Review, Elsevier, vol. 35(5), pages 1157-1184, July.
    9. Deardorff, A.V. & Brown, D.K. & Stern, R.M., 1996. "Some Economic Effects of the Free Trade Agreement Between Tunisia and the European Union," Working Papers 385, Research Seminar in International Economics, University of Michigan.
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