IDEAS home Printed from https://ideas.repec.org/a/kap/compec/v28y2006i1p29-49.html
   My bibliography  Save this article

Introducing Imperfect Competition in CGE Models: Technical Aspects and Implications

Author

Listed:
  • Roberto Roson

Abstract

This paper considers the technical aspects and the consequences, in terms of simulation results and policy assessment, of introducing imperfect competition in a CGE model. The modifications to the standard CGE framework needed to model imperfect competition in some industries are briefly discussed. Next, the paper discusses whether, how much and why, those changes may affect the qualitative output of a typical simulation experiment. It is argued that technical choices made in designing the model structure may have a significant impact on the model behavior. This is especially evident when the output of the model, under an imperfect competition closure, is compared with that obtained under a standard closure, assuming perfect competition. As an illustration, a scenario of agricultural trade liberalization under alternative market structures is analyzed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Roberto Roson, 2006. "Introducing Imperfect Competition in CGE Models: Technical Aspects and Implications," Computational Economics, Springer;Society for Computational Economics, vol. 28(1), pages 29-49, August.
    • Handle: RePEc:kap:compec:v:28:y:2006:i:1:p:29-49
    DOI: 10.1007/s10614-006-9034-6
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10614-006-9034-6
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10614-006-9034-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kaludura Abayasiri-Silva, 1999. "Market Power in Australian Manufacturing Industry: A Confirmation of Hall's Hypothesis," Centre of Policy Studies/IMPACT Centre Working Papers g-132, Victoria University, Centre of Policy Studies/IMPACT Centre.
    2. Harris, Richard, 1984. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," American Economic Review, American Economic Association, vol. 74(5), pages 1016-1032, December.
    3. Thomas W. Hertel & Padma Swaminathan, 1996. "Introducing Monopolistic Competition into the GTAP Model," GTAP Technical Papers 309, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    4. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Springer;Society for Computational Economics, vol. 9(2), pages 83-127, May.
    5. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
    6. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
    7. Francois, Joseph F., 1998. "Scale Economies And Imperfect Competition In The Gtap Model," Technical Papers 28718, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2017. "Quantifying The Uruguay Round," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 16, pages 363-388, World Scientific Publishing Co. Pte. Ltd..
    9. Mohamed Hedi Bchir & Yvan Decreux & Jean-Louis Guérin & Sébastien Jean, 2002. "MIRAGE, a Computable General Equilibrium Model for Trade Policy Analysis," Working Papers 2002-17, CEPII research center.
    10. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gentile, Elisabetta & Li, Gen & Mariasingham, Mahinthan Joseph, 2020. "Assessing the impact of the US-PRC trade dispute using a multiregional CGE model," Conference papers 333144, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Braymen, Charles B., 2011. "Sectoral structure, heterogeneous plants, and international trade," Economic Modelling, Elsevier, vol. 28(4), pages 1967-1976, July.
    3. Bosello, Francesco & Roson, Roberto, 2006. "Climate Change, Energy Demand and Market Power in a General Equilibrium Model of the World Economy," Conference papers 331448, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Innwon Park, 2006. "East Asian Regional Trade Agreements: Do They Promote Global Free Trade?," Pacific Economic Review, Wiley Blackwell, vol. 11(4), pages 547-568, December.
    5. Dessus Sebastien & Ghaleb Joey R, 2008. "Trade and Competition Policies for Growth in Lebanon: A General Equilibrium Analysis," Review of Middle East Economics and Finance, De Gruyter, vol. 4(1), pages 59-80, January.
    6. City Eldeep & Chahir Zaki, 2023. "On the unfinished business of stabilization programs: a CGE model of Egypt," Middle East Development Journal, Taylor & Francis Journals, vol. 15(1), pages 66-100, January.
    7. Oyamada, Kazuhiko, 2013. "Parameterization of applied general equilibrium models with flexible trade specifications based on the Armington, Krugman, and Melitz models," IDE Discussion Papers 380, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Oyamada, Kazuhiko, 2014. "Behavioral Characteristics of Applied General Equilibrium Models with an Armington-Krugman-Melitz Encompassing Module," Conference papers 332442, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Roson, Roberto & Oyamada, Kazuhiko, 2014. "Introducing Melitz-Style Firm Heterogeneity in CGE Models: Technical Aspects and Implications," Conference papers 332433, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Meyer, Bernd & Ahlert, Gerd, 2019. "Imperfect Markets and the Properties of Macro-economic-environmental Models as Tools for Policy Evaluation," Ecological Economics, Elsevier, vol. 155(C), pages 80-87.
    11. Oyamada, Kazuhiko, 2015. "Behavioral characteristics of applied general equilibrium models with an Armington-Krugman-Melitz encompassing module," IDE Discussion Papers 525, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    12. Wolfgang Britz & Roberto Roson, 2018. "Exploring Long Run Structural Change with a Dynamic General Equilibrium Model," Working Papers 2018: 12, Department of Economics, University of Venice "Ca' Foscari".
    13. Tchouamou Njoya, Eric, 2020. "An analysis of the tourism and wider economic impacts of price-reducing reforms in air transport services in Egypt," Research in Transportation Economics, Elsevier, vol. 79(C).
    14. De Souza Ferreira Filho, Joaquim Bento, 1999. "Trade Creation X Trade Diversion: Evidences from the GTAP Model in the Mercosur Integration Process," Conference papers 330889, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    15. Raymond Li, 2012. "Imperfect competition in the international coal industry – does it matter?," Economics Bulletin, AccessEcon, vol. 32(3), pages 1821-1830.
    16. He, Yongda & Lin, Boqiang, 2017. "The impact of natural gas price control in China: A computable general equilibrium approach," Energy Policy, Elsevier, vol. 107(C), pages 524-531.
    17. Soregaroli, Claudio & Sckokai, Paolo & Moro, Daniele, 2011. "Agricultural policy modelling under imperfect competition," Journal of Policy Modeling, Elsevier, vol. 33(2), pages 195-212, March.
    18. Kazuhiko Oyamada, 2014. "Behavioral Characteristics of Applied General Equilibrium Models with Flexible Trade Specifications Based on the Armington, Krugman, and Melitz Models," EcoMod2014 6704, EcoMod.
    19. Chris Murphy, 2016. "The effects on consumer welfare of a corporate tax cut," Departmental Working Papers 2016-10, The Australian National University, Arndt-Corden Department of Economics.
    20. Oyamada, Kazuhiko, 2014. "Neutrality in the choice of number of firms or level of fixed costs in calibrating an Armington-Krugman-Melitz encompassing module for applied general equilibrium models," IDE Discussion Papers 465, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    21. Ciuriak, Dan & Dadkhah, Ali & Xiao, Charles, 2019. "Quantifying the USMCA," Conference papers 333073, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 武田 史郎, 2007. "貿易政策を対象とした応用一般均衡分析," Discussion Papers (Japanese) 07010, Research Institute of Economy, Trade and Industry (RIETI).
    2. Betarelli, Admir Antonio & Domingues, Edson Paulo & Hewings, Geoffrey John Dennis, 2020. "Transport policy, rail freight sector and market structure: The economic effects in Brazil," Transportation Research Part A: Policy and Practice, Elsevier, vol. 135(C), pages 1-23.
    3. Minor, Peter J., 2010. "Time as a Barrier to Trade: A GTAP Database of ad valorem Trade Time Costs," Conference papers 331960, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Sabine Mage-Bertomeu, 2006. "Les modèles d'équilibre général appliqués à la politique commerciale : développements récents," Revue d'économie politique, Dalloz, vol. 116(3), pages 357-381.
    5. Shiro Takeda, 2010. "A computable general equilibrium analysis of the welfare effects of trade liberalization under different market structures," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 75-93.
    6. Lee, Donna J. & Zhang, J., 2006. "Estimating Global Environmental Implications of Agricultural Trade Liberalization: A Computable General Equilibrium Analysis," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25290, International Association of Agricultural Economists.
    7. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.
    8. Aileen J. Thompson, 1999. "Import Competition and Market Power: Canadian Evidence," Carleton Economic Papers 99-14, Carleton University, Department of Economics, revised Mar 2000.
    9. Huiwen Lai & Daniel Trefler, 2002. "The Gains from Trade with Monopolistic Competition: Specification, Estimation, and Mis-Specification," NBER Working Papers 9169, National Bureau of Economic Research, Inc.
    10. Joseph F. Francois & Douglas Nelson, 2002. "A Geometry Of Specialisation," Economic Journal, Royal Economic Society, vol. 112(481), pages 649-678, July.
    11. Arturo Pérez Mendoza, 2006. "Análisis del efecto económico de la aplicación de una medida de salvaguarda: el caso de la industria del triplay," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 67-96, January-J.
    12. Raymond Li, 2012. "Imperfect competition in the international coal industry – does it matter?," Economics Bulletin, AccessEcon, vol. 32(3), pages 1821-1830.
    13. Dirk Willenbockel, 2005. "The Price Normalisation Problem in General Equilibriun Models with Oligopoly Power: An Attempt at Perspective," GE, Growth, Math methods 0505002, University Library of Munich, Germany.
    14. Jesper Jensen & David Tarr, 2014. "Deep Trade Policy Options for Armenia: The Importance of Trade Facilitation, Services and Standards Liberalization," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 19, pages 453-508, World Scientific Publishing Co. Pte. Ltd..
    15. Soo Yuen Chong & Jung Hur, 2007. "Overlapping Free Trade Agreements of Singapore-USA-Japan : A Computational Analysis," Trade Working Papers 21931, East Asian Bureau of Economic Research.
    16. Anthony Rezitis & Maria Kalantzi, 2011. "Investigating Market Structure of the Greek Manufacturing Industry: A Hall-Roeger Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(4), pages 383-400, December.
    17. Thomas F. Rutherford & David G. Tarr, 2017. "Trade liberalization, product variety and growth in a small open economy: a quantitative assessment," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 17, pages 389-414, World Scientific Publishing Co. Pte. Ltd..
    18. Willenbockel, Dirk, 2004. "Specification choice and robustness in CGE trade policy analysis with imperfect competition," Economic Modelling, Elsevier, vol. 21(6), pages 1065-1099, December.
    19. Rutherford, Thomas & Tarr, David & Shepotylo, Oleksandr, 2005. "The impact on Russia of WTO accession and the Doha agenda : the importance of liberalization of barriers against foreign direct investment in services for growth and poverty reduction," Policy Research Working Paper Series 3725, The World Bank.
    20. Bajo-Rubio, Oscar & Gomez-Plana, Antonio G., 2005. "Simulating the effects of the European Single Market: A CGE analysis for Spain," Journal of Policy Modeling, Elsevier, vol. 27(6), pages 689-709, September.

    More about this item

    Keywords

    computable general equilibrium models; imperfect competition; oligopolistic models; economies of scale; empirical industrial organization; agriculture; trade liberalization; trade policy;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:compec:v:28:y:2006:i:1:p:29-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.