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.

21

i

ikij

jk

xmTD

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 = 442 FTAw2 = 652

442-652= -210 :

12 mtp0%4 sgr0%

28 srv0%

27 utl0%

8 fsh0%

5 pfb0%

9 for0%

11 mnr0%

10 cog0%

6 oag0%18 txt1%2 vfn1%3 osd1%17 btp

1%16 ofp

2%14 drp

2%7 lvk2%21 pap

2%26 omn3%13 vof3%20 w dp

3%

22 chm7%

25 lmn8%

15 sgp9%

23 mmp9%

1 grn11%

19 w al14%

24 mvt18%

MTAX Welfare Contribution

dwelcnt EU into MORtrade 2 EU 3 ROW Total19 wal 168.55 -6.3 162.2524 mvt 72.21 -21.98 50.23

dwelcnt EU into MORtrade 2 EU 3 ROW Total19 wal 182.62 8.28 190.924 mvt 91.24 -3.46 87.78

19 wal -28.6524 mvt -37.55

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)];

R031 TempCoeff1 qxs 109.872 e1_ams 03 e1_qim -50.014 e1_ESUBM -26.89

Differences mvh

FTAw2 pms1 MOR -10.192 EU -21.203 ROW -10.62

FTA pms1 MOR -12.192 EU -16.203 ROW -0.72

pim= -18.6 pim= -19.2

Conclusions