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Imperfect Competition - The impact of FTA on productivity under the oligopoly market in Morocco - 1.Intuition behind the linkage between FTA and productivity.

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Presentation on theme: "Imperfect Competition - The impact of FTA on productivity under the oligopoly market in Morocco - 1.Intuition behind the linkage between FTA and productivity."— Presentation transcript:

1 Imperfect Competition - The impact of FTA on productivity under the oligopoly market in Morocco - 1.Intuition behind the linkage between FTA and productivity 2.Comparative analysis based on the case, i.e. FTA., entry 3.Sum up

2 Intuition / Logic behind the model I - Key equations - 1. Demand Market Share (the sales-weighted): 2. Demand Market Elasticity: 3. Mark up: 4. Productivity:

3 Intuition / Logic behind the model II - Graphic -

4 Numerical Example: multi-lateral., with entry Percentage change in selected variables Meat products Demand mkt share Demand mkt elastisity 1.70 Markup Productivity 1.80 Output per firms 7.93

5 Scenario I Elimination of all tariffs on non-food products Partial elimination of tariffs on food products Financial aids from EU to Morocco with $180 million per year Market share elasticityMarkup productivity # of firms

6 Scenario II Tariff elimination of meat products sector leftover Financial aids from EU to Morocco with $180 million per year Market Share elasticityMarkup productivity # of firms %

7 Comparisons elasticity of sc 2 < elasticity of sc 1 But, mark-up increased more because higher % of exit occurred in sc 2. more productivity decreases in sc 2. Market share elasticityMarkup productivity # of firms SC SC


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