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Import sensitive products and perverse tariff-rate quota liberalization

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  • Sébastien Pouliot
  • Bruno Larue

Abstract

This paper shows that a Tariff-Rate-Quota's (TRQ) minimum access expansion can perversely trigger domestic price increases. Often, TRQs have prohibitive over-quota tariffs to mimic import quotas in providing minimum market access. In the WTO's Doha Round, it is likely that countries using TRQs will avoid aggressive tariff reductions if they increase the quota portion of TRQs. We show that when the import price lies between the unit cost of production and the price received by domestic upstream firms, an increase in import quota as a share of domestic production may cause an increase in the domestic retail price.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 45 (2012)
Issue (Month): 3 (August)
Pages: 903-924

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Handle: RePEc:cje:issued:v:45:y:2012:i:3:p:903-924

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Cited by:
  1. Abdessalem Abbassi & Lota D. Tamini & Ahlem Dakhlaoui, 2013. "Production Cost Asymmetry, Minimum Access and Reciprocal Dumping," Cahiers de recherche CREATE 2013-7, CREATE.
  2. Marie-Hélène Felt & Bruno Larue & Jean-Philippe Gervais, 2012. "Compositional Standards, Import Permits and Market Structure: The Case of Canadian Cheese Imports," The World Economy, Wiley Blackwell, vol. 35(8), pages 1053-1072, 08.
  3. Lambert, Remy, 2012. "A Primer on the Economics of Supply Management and Food Supply Chains," Working Papers, Structure and Performance of Agriculture and Agri-products Industry (SPAA) 125246, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  4. Bruno Larue & Mohamed Jeddy & Sébastien Pouliot, 2013. "On the Number of Bidders and Auction Performance: when More Means Less," Cahiers de recherche CREATE 2013-4, CREATE.

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