General Equilibrium Assessment of Trade Liberalization Effects under Cournot Oligopoly Market Structures: The Case of Tunisia
AbstractIn this paper we simulate the impact of removing all tariffs on imports under both competitive and Cournot oligopoly market structures with and without barriers to entry and exit. We find that trade liberalization induces welfare gains equal to 1 percent with perfect competition and 0.9 percent with increasing returns to scale, oligopoly and barriers to entry and exit, but welfare losses equal to 0.4 percent with free entry and exit. Sensitivity analysis shows that welfare losses depend on elasticities of substitution between imported and domestic goods and cost disadvantage ratios.
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Bibliographic InfoPaper provided by Economic Research Forum in its series Working Papers with number 2009.
Length: 17 pages
Date of creation: Mar 2000
Date of revision: Mar 2000
Publication status: Published by The Economic Research Forum (ERF)
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