An equilibrium displacement approach to analyzing the effects of tariff reduction on farmers' profits: The Korea-Chile FTA's effects on Korean grape producers

The present study develops an equilibrium displacement model (EDM) to evaluate the impacts of a free trade agreement (FTA) on the profits of individual farmers. The parameters representing the share of profit within revenue and the elasticity of cost with respect to quantity in the cost function play key roles in assessing the change in individual farmers' profit. The application of the developed EDM to assess the impacts of the Korea-Chile FTA indicates that this FTA has little impact on the Korean grape market and grape producers in Korea.