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General Equilibrium Assessment of Trade Liberalization Effects under Cournot Oligopoly Market Structures: The Case of Tunisia

Rim Chatti

No 2009, Working Papers from Economic Research Forum

Abstract: In 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.

Pages: 16 pages
Date: 2000, Revised 2000
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Published by The Economic Research Forum (ERF)

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