Assessing the Benefits of Telecommunications Liberalization to Tunisia

Denise Konan and Ari Van Assche

No 331238, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: In this paper we provide a quantitative analysis of the welfare impact of improved domestic market access for foreign telecom providers in Tunisia. In this context, we set up a CGE model for Tunisia in which the domestic telecommunications industry is initially monopolized. In that case, one of the major potential benefits of providing a license to a foreign telecom provider is that it can erode domestic market power. Potentially offsetting these benefits, however, limited entry by foreign firms into the domestic telecom market may shift profits abroad and may induce an international cartel formation if the regulation of the domestic telecom sector is weak. We find that limited foreign market access in Tunisia is welfare improving if regulation can prevent the domestic incumbent and the foreign service provider to form a cartel. If they form a cartel, however, foreign market access is welfare reducing. Our results emphasize the importance of market structure and the regulatory environment on the success of telecom liberalization. It strengthens the argument that pro-competitive regulatory reforms need to accompany telecommunications liberalization in developing countries such as Tunisia.

Keywords: International Relations/Trade; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 30
Date: 2004
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https://ageconsearch.umn.edu/record/331238/files/1695.pdf (application/pdf)

Related works:
Working Paper: Assessing the Benefits of Telecommunications Liberalization to Tunisia (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331238

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