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The impact of smuggled cigarettes to national economics in Taiwan-A CGE model analysis

Abstract This paper aims to apply the computable general equilibrium (CGE) model to simulate how the smuggling business of tobacco affects the structures of relative industries and what impacts it brings to the Taiwan’s national economics. From empirical results, after joining the WTO, the increase of smuggling cigarettes substitute will increase by 20%, which will lead to a slight decrease of around 0.013% in GDP, while the equivalent variation will increase by NT $ 594.448 million.