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Food Supply Management and Tariffication: A Game Theoretic Approach

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  • Schmitz Troy G.

    (Morrison School of Agribusiness and Resource Management, Arizona State University, Tempe, Arizona, USA)

  • Schmitz Andrew

    (Food and Resource Economics Department, Institute of Food and Agricultural Sciences University of Florida, Gainesville, Florida, USA)

Abstract

We compare the current Canadian supply management regime in which producers and importers benefit from rent-seeking activities that set production quota and import quota levels with those under a tariff, in which producers partakes in rent-seeking activities in order to induce the government to introduce a favorable tariff regime. We explore two different quota-setting games: (1) the import quota and production quota are set at a level that arises from a Cournot-Nash equilibrium between producers and importers; and (2) the producer marketing board acts as a Stackelberg leader, taking into account the importersÂ’ reaction to its production quota level. We compare these quota-setting games with two different tariff-setting games: (1) A non-cooperative game in which the government sets the tariff at a level that maximizes tariff revenue; and (2) A cooperative game in which producers, through rent-seeking activities, induce the government to set the tariff at a level that maximizes joint government and producer rents.

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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 1 (2002)
Issue (Month): 1 (October)
Pages: 1-21

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Handle: RePEc:bpj:bjafio:v:1:y:2002:i:1:n:4

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