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Article
Some Unintended Consequences of TRQ Liberalization
Journal of Agricultural & Food Industrial Organization (2006)
  • Jean-Philippe Gervais
  • James I Rude
Abstract

This paper analyzes the impacts of trade liberalization in a non-integrated industry where a marketing agency controls the supply of a necessary input in the production of a processed commodity. Trade of the processed good is restricted through a Tariff-Rate Quota (TRQ) and domestic processors operate in an imperfectly competitive industry. Under a fixed proportions technology, an increase in the minimum access commitment of the TRQ will generally lower the domestic retail price to consumers if the marketing agency is a profit-maximizing monopolist. Conversely, if the marketing agency pursues some specific non-economic objectives, it is shown that increases in the minimum access commitment holding the tariff rates constant can lead to higher retail prices and thus negate the benefits of trade liberalization for consumers.

Keywords
  • Tariff-rate quotas,
  • Trade liberalization,
  • Marketing agencies
Publication Date
December, 2006
Citation Information
Jean-Philippe Gervais and James I Rude. "Some Unintended Consequences of TRQ Liberalization" Journal of Agricultural & Food Industrial Organization Vol. 1 Iss. 1 (2006)
Available at: http://works.bepress.com/jp_gervais/2/