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GTAP Resource #1512

"Assessing the Benefits of Telecommunications Liberalization to Tunisia"
by Van Assche, Ari and Denise Eby Konan

In this paper, we analyze the welfare impact of improved domestic market access for foreign telecom providers in Tunisia. In this context, we set up a theoretical model where the domestic telecommunications industry is assumed to be imperfectly competitive. In that case, one of the major potential benefits of providing a license to a more efficient foreign telecom provider is that it increases efficiency and erodes market power (pro-competitive effect). Potentially offsetting these benefits, however, is that limited entry by foreign firms into the domestic telecom market shifts profits abroad and may induce cartel formation between the domestic and foreign firm if the regulation of the domestic telecom sector is weak. We first theoretically investigate under which circumstances foreign market access in the telecommunications sector is welfare improving. We subsequently incorporate the model into a CGE framework to assess the potential benefits of telecommunications liberalization to Tunisia. Our results emphasize the importance of market structure and the regulatory environment on the success of telecom liberalization. It strengthens the argument that pro-competitive regulatory reforms need to accompany telecommunications liberalization in developing countries such as Tunisia.

Resource Details (Export Citation) GTAP Keywords
Category: 2004 Conference Paper
Status: Published
By/In: Presented at the 7th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2004
Version: 1
Created: Van Assche, A. (5/1/2004)
Updated: Van Assche, A. (5/1/2004)
Visits: 2,668
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