Simulations on a computational general equilibrium trade model incorporating scale economies and product differentiation, with varying factor endowments

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dc.contributor.authorTurmel, Brendaen_US
dc.date.accessioned2024-08-15T20:10:41Z
dc.date.available2024-08-15T20:10:41Z
dc.date.copyright1994en_US
dc.date.issued1994
dc.degree.departmentDepartment of Economicsen_US
dc.degree.levelMaster of Arts M.A.en
dc.description.abstractThe purpose of this thesis is to evaluate the welfare implications of introducing imperfect competition into the conventional model of international trade, under varying factor endowments, with and without intervention on the part of the trading partners. The approach used is the construction of a two-country, two-product, two-input computational general equilibrium model incorporating output­ generated scale economies at the firm level, and product differentiation in one of the product markets. The model constructed is based on assumptions in the recent theoretical literature on the "new" trade theory, which chooses to represent imperfect markets through Chamberlin's monopolistically competitive market structure. The model can be considered a generalized form of the familiar Heckscher-Ohlin (H-O) model, which is representative of conventional trade theory. It therefore provides the opportunity, by varying the value of certain key parameters in the model, to directly compare welfare levels under varying degrees of scale economies and product differentiation. This type of model has been referred to in the literature as a Neo­Chamberlinian-Heckscher-Ohlin (C-H-O) generalized trade model. The model is solved using the Gauss Non-Linear Simultaneous Equations application (NLSYS) on the following three versions of the generalized C-H-0 model: one which utilizes an exact specification of demand elasticity for the differentiated product, one which utilizes an approximation of elasticity commonly utilized in the literature, and one which utilizes the more restricted Heckscher-Ohlin version of the model. Simulations are carried out on each version of the model, for varying values of key model parameters and alternative combinations of factor endowments, and resulting welfare levels are compared. In addition, an import tariff and a consumption subsidy on the differentiated product are introduced as exogenous policy variables in the generalized model. Simulations are carried out for a variety of policy scenarios, involving use of one or both policy instruments by one or both countries, under alternative factor endowments. Welfare levels with and without policy intervention are compared. The purpose is to investigate whether welfare gains are possible with policy intervention, and which instrument or combination of instruments give the greatest potential welfare gain.en
dc.format.extent98 pages
dc.identifier.urihttps://hdl.handle.net/1828/19953
dc.rightsAvailable to the World Wide Weben_US
dc.titleSimulations on a computational general equilibrium trade model incorporating scale economies and product differentiation, with varying factor endowmentsen_US
dc.typeThesisen_US

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