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Abstract

We developed a trade model under imperfect competition to analyze the market power of U.S. and Chinese apple producers in the Association of Southeast Asian Nations (ASEAN) market and their domestic markets and the elimination of ASEAN tariffs on U.S. and Chinese apples. We also formulated welfare functions for the United States, China, and ASEAN. Comparative static results are derived to analyze the effect of tariff changes on exports, domestic sales, and welfare. Based on the theoretical model, we derived an econometric specification and used the new empirical industrial organization literature to estimate the market power of U.S. and Chinese apple producers. The econometric model is simulated to quantify the effect of tariff removal on exports and domestic sales.

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