A CGE Assessment of FTA Between Tunisia and the EU Under Oligopolistic Market Structures

In this paper, the impact of removing all Tunisian tariffs on imports from the EU, while maintaining protection on imports from the rest of the world, is evaluated using computable general equilibrium (CGE) models. Both competitive and Cournot oligopolistic commodities market structures with and without barriers to entry and exit are considered. It is found that a free trade agreement (FTA) improves welfare in all cases, with maximum gains under oligopoly and free entry and exit. At the sectoral level, the FTA benefits different industries at the expense of agriculture and services, which are relatively intensive in primary factors of production.