A tool to simulate the welfare impacts of competition 

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The project

WELCOM is a novel microsimulation Stata tool that estimates the welfare impacts of competition (e.g. a change in market structure such as a move from monopoly to a more competitive market) that could be induced through regulatory reform or easing of trade barriers. WELCOM provides an interactive interface that requires data from household surveys, particularly households’ consumption of different goods and services, as well as information about market structure in the relevant sectors, to assess how changes in prices impact the welfare of households along the income/consumption distribution. In addition, the tool uses a poverty line and a relevant welfare aggregate (income or consumption) to assess the first-order effects of market reforms on poverty indicators such as headcount and poverty gap, additionally to changes in inequality.

The model

WELCOM is an automated market competition simulation model designed to carry out quick distributional analyses of changes in market competition conditions. The model estimates the impact of changes in market power on household welfare, poverty and inequality. WELCOM is able to produce 17 tables and 6 graphs of automated output and allows saving input data for future reference.

Please acknowledge the authors by quoting:   

Abdelkrim Araar, Eduardo A. Malasquez, Sergio Olivieri, and Carlos Rodriguez-Castelan, (2018), "Introducing WELCOM: A tool to simulate the welfare impacts of competition", World Bank


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