This Paper Represents an Attempt to Measure the Net Cost Advantage Or Disadvantage That the Imiplementation of a Free Trade Zone Can Represent for a Particular Industry, Without Resorting to a Large General Equilibrium Model. the Two Industries Strudies Are the Canadian Telecommunication Equipments Industry and the Canadian Computers Industry. a Modified Concept of Net Effective Protection Is Designed to Incorporate Both Domestic and Foreign Tariffs. Production and Employment Effects Are Then Simulated for Different Types of Firms Characterized with Different Levels of Export Activities. a Version of the Concept Is Also Used to Measure the Impact of Trade Liberalization on the Firms' Profitability. Rationalization Effects and General Equilibrium Effects Are Then Introduced by Comparing Canadian and U.S. Conditions of Production and Expected Relative Productivity Growth of the Industires. the Paper Concludes That Even Though North American Free Trade Will Increase the Profitability of Most Firms in the Two Industries, Production and Employment in These Canadian Industries Could Be Reduced Within a Complete Free Trade Environment.
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Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number
8634.