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A structural model for evaluating preferential trade agreements


  • Chaaban, J.
  • Thomas, A.


This paper develops and estimates a structural model of imperfect competition in international markets. The model incorporates a flexible non-linear demand framework with structural price equations. A general conjonctural variation approach is developed to characterize strategic interaction. This allows the simultaneous evaluation of the sector-specific terms of trade effects of a Preferential Trade Agreement (PTA), and the extend of international competition in the sector under consideration. The model is then used to evaluate the impact of the Lebanese-Egyptian PTA on the iron and steel import sector in Lebanon. Results confirm the need of a structural approach in the empirical assessment of PTAs. ...French Abstract : Un modèle structurel de la concurrence imparfaite dans les marchés internationaux est développé et estimé. Le modèle incorpore une demande non linéaire flexible et un système d'équations de prix structurel. Une approche utilisant la méthode des variations conjecturales permet alors de caractériser le comportement stratégique des firmes-pays qui exportent vers un marché donné. Ceci permet d'évaluer simultanément les effets de la signature d'un accord de libre-échange sur un secteur donné et la mesure du degré de concurrence sur ce secteur. On présente aussi une application empirique du modèle en évaluant l'impact de l'accord de libre-échange libano égyptien sur le secteur d'importation de l'acier au Liban. Les résultats obtenus confirment la nécessité de prendre en compte la dimension structurelle dans l'évaluation empirique des effets des accords de libre-échange.

Suggested Citation

  • Chaaban, J. & Thomas, A., 2004. "A structural model for evaluating preferential trade agreements," Economics Working Paper Archive (Toulouse) 200415, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
  • Handle: RePEc:rea:inrawp:200415

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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