IMPERFECT COMPETITION IN THE CONTEXT OF AGM WHY IMPERFECT COMPETITION? –REALISTIC ASSUMPTION FOR MANUFACTURING & SERVICES SECTORS –GAINS FROM ECONOMIES.

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Presentation transcript:

IMPERFECT COMPETITION IN THE CONTEXT OF AGM WHY IMPERFECT COMPETITION? –REALISTIC ASSUMPTION FOR MANUFACTURING & SERVICES SECTORS –GAINS FROM ECONOMIES SCALE (Harry & Cox, 1986)

IMPERFECT COMPETITION IN GTAP FRANÇOIS J. (1998, TECHNICAL PAPER 14) ELBEHRI AZIZ & THOMAS HERTEL:“A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization”; 2006.

ELBEHRI AZIZ & THOMAS HERTEL(2006) RELATIVELY EASY TO INCLUDE IC IN RELEVANT EQUATIONS OF GTAP MODEL DIFFICULT & INTENSIVE IN DATA AND CALIBRATION: –Cournot model by Herfindhal index –Cost Disadvantage Ratio (CDR) by gross plant-level sales

ELBEHRI AZIZ & THOMAS HERTEL(2006). MAIN CONCLUSIONS & FINDINGS FTA “Deteriorating tot” Reduction of qo per firm in ind with high scale economies Trade diversion Increase unemployment of labour even with transfer from EU MTA “Lesser tot” Positive scale effect in the qo Trade creation Decrease unemployment of labour even without transfer from EU

PRESENTATIONS TRADE DIVERSION TOT PRODUCTIVITY TRANSFERS

TRADE DIVERSION AND TRADE CREATION & DIVERSION IN THE CONTEXT OF AGM TEAM 1: WOJTEK & J.L.H IMPERFECT COMPETITION

TRADE DIVERSION DEFINITION: grossly, TD can be defined as the displacement of more competitive imports from ROW in favour of partner countries. DIFFERENT MEASURES: compatibility index (Grav. Models); welfare analyses (AGE)--->Alloca. Effi.

DESIGN OF OUR EXPERIMENT TWO MAIN SIMULATIONS: FTA & MTA SAME CLOSURE SYMMETRICAL SHOCKS: –FTA:100% REDUCTION IN TARIFF FROM MOROCCO TO EU –MTA: 100% REDUCTION IN TARIFF BETWEEN MOROCCO & ALL OTHER REGIONS –NON AGRICULTURAL & NON FOOD COMMODITIES

welfare contribution of Imports FTA = 442FTAw2 = = -210 :

MTAX Welfare Contribution

Mvt Decomposion Equation MKTPRICES (-21) pms(i,r,s) = tm(i,s) + tms(i,r,s) + pcif(i,r,s); Equation DPRICEIMP (-18) pim(i,s) = sum(k,REG, MSHRS(i,k,s) * [pms(i,k,s)-ams(i,k,s)]) Equation IMPORTDEMAND qxs(i,r,s) = -ams(i,r,s) + qim(i,s) - ESUBM(i) * [pms(i,r,s) - ams(i,r,s) - pim(i,s)]; Equation CONT_EV_qimisr CNTqimisr(i,s,r) = MTAX(i,s,r)*[0.01*EVSCALFACT(r)]*[qxs(i,s,r) - pop(r)]; R031TempCoeff 1 qxs e1_ams0 3 e1_qim e1_ESUBM-26.89

Differences mvh FTAw2 pms 1 MOR EU ROW FTA pms 1 MOR EU ROW-0.72 pim= -18.6pim= -19.2

Conclusions