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

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  • Ahn, Byeong-il
  • Im, Jeong-bin

Abstract

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.

Suggested Citation

  • Ahn, Byeong-il & Im, Jeong-bin, 2016. "An equilibrium displacement approach to analyzing the effects of tariff reduction on farmers' profits: The Korea-Chile FTA's effects on Korean grape producers," Economics Discussion Papers 2016-10, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201610
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    References listed on IDEAS

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    5. Mingxia Zhang, 1997. "The Effects of Imperfect Competition on the Size and Distribution of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1252-1265.
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    7. Byeong‐Il Ahn & Hyunok Lee, 2010. "An equilibrium displacement approach to oligopoly market analysis: an application to trade in the Korean infant formula market," Agricultural Economics, International Association of Agricultural Economists, vol. 41(2), pages 101-109, March.
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    Cited by:

    1. Meuthia Rachmaniah & Arif Imam Suroso & Muhamad Syukur & Irman Hermadi, 2022. "Supply and Demand Model for a Chili Enterprise System Using a Simultaneous Equations System," Economies, MDPI, vol. 10(12), pages 1-21, December.
    2. Cáceres Bustamante, Javiera & López Giral, Dorotea & Muñoz Navia, Felipe, 2022. "The Chile-Republic of Korea Free Trade Agreement: a synthetic control assessment," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.

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    More about this item

    Keywords

    EDM; simulation; tariff reduction; farm profit; cost function;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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