Imperfect Competition, Economies of Scale and Trade Liberalisation in Tunisia - A Comparative Analysis Using a Computable General Equilibrium Model (CGEM)

Within a multi-sectoral general equilibrium framework, we explicitly model either competitive or Cournot oligopolistic commodities market structures. The model is used to assess the impact of trade liberalization on Tunisia economy. We show that the results are different from those obtained with perfect competition in terms of sectors allocations, but also mainly in terms of welfare. It is found that the trade liberalization improves welfare in all cases, and these gains are the most important with oligopoly. The existence of imperfection competition will be beneficial if the local producers profit from trade liberalization to decrease their production prices and to increase their production level. The outcome shows that the traditionally export-oriented sectors will cope with the liberalisation without any problems. In opposition the sectors that are usually more protected against foreign competition like the agricultural sector will suffer. The most unfortunate effects refer to public budget equilibrium. The fiscal reform proves to be an important element of every complementary domestic policy of the commercial liberalization.