CoPS/IMPACT Working Paper Number OP-54

Title: A Harris-style miniature version of ORANI

Authors: Peter Cory and Mark Horridge


A small version of ORANI is constructed, incorporating economies of scale and imperfect competition. Economic mechanisms are borrowed from a model constructed by Richard Harris, and described in his 1984 book "Trade, Industrial Policy and Canadian Manufacturing". The miniature Harris-like model is used to determine whether Harris' conclusions might carry over to Australia, and to see which of his several assumptions are responsible for his more striking results. We find that import-parity pricing is responsible for most of the 'action', while Lerner pricing (based on perceived demand elasticities) yields results similar to the conventional CRTS model.

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JEL Classification: C68, L11, L13.

Keywords: Economies of scale, imperfect competition, applied general equilibrium models.

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A related paper is:
Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy, by Abayasiri-Silva and Horridge here.

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