The nexus between income distribution,trade policy,and monopoly power: An assessment of the tin market

The article suggests a manner in which degrees of monopoly power can be introduced into a trade policy model of the computable general equilibrium type. The distributional effects of tariffs and subsidies are compared, first under competitive conditions and then under conditions of monopoly power.The tin market, for which Malaysia can be assumed to exert monopoly power, is used as an example to show the distributional consequences of applying a competitive model in cases where a model allowing for monopoly power would have been more appropriate. The existence of monopoly power is shown to have important distributional effects. Policy modelers, dealing with distributional issues, should therefore be careful about the assumptions made about market forms.