Comparison of the Effects of Trade Liberalization Under Different Market Structures

Abstract

Using a static world CGE model, this paper compares welfare and output effects of trade liberalization of a perfectly competitive model and eight imperfectly competitive models in a unified framework. Our main finding is that welfare effects are generally robust to the model choice whereas output effects in some sectors drastically vary according to the model choice. Although there are a large number of CGE studies that try to analyze effects of trade liberalization on output, our analysis demonstrates that results derived from a specific model can be misleading.