GTAP Resources: Resource Display
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"Regulation, Market Structure, and Services Trade Liberalization in Tunisia " by Konan, Denise Eby Abstract International trade in services, far more than trade in goods, is affected by domestic regulations. Unlike goods which can be traded across borders, services often require the commercial presence of foreign providers. In this paper, we analyze the importance of regulation and market structure on the welfare impact of service trade liberalization. We incorporate an imperfectly competitive services sector that can take on various market structures into a standard CGE model for a small open economy. We assume that in the benchmark a domestic incumbent monopolizes the services sector. In counterfactual experiments, the telecommunications sector is liberalized and a license provided to a single foreign provider. If regulations can enforce competition between domestic and foreign firms, then Cournot duopoly prevails. If regulations are weak, domestic and foreign firms may form a cartel. The interplay of three impacts are important. Foreign entry provides a pro-competitive effect which both increases output and lowers price. Foreign firms may repatriate profits earned domestically. Finally, the new entrant may produce with improved technological efficiency. We apply our framework to the economy of Tunisia using a 1995 social accounting matrix that was expanded by the authors, and contributed to the most recent GTAP database. A static applied general equilibrium model is developed using GAMS/MPSGE. We find that if regulation guarantees competition, Tunisia’s welfare can improve up to 1.7 percent. If a cartel is formed, however, Tunisia’s welfare is estimated to drop 0.15 percent. The results emphasize the importance of market structure and the regulatory environment on the success of services liberalization. |
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Public Access  GTAP Resource 1781 (448.7 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
