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Optimal Trade Policies: An Application to the UK Fertilizer Market

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  • McCorriston, Steve
  • Sheldon, Ian

Abstract

This paper evaluates the trade policies introduced into the U.K. fertilizer market by the U.K. government and EC Commission in 1987. These policies are assessed in the context of theoretical developments in the analysis of trade policy where markets are imperfectly competitive. Specifically, optimal tariff and tariff-equivalent quota policies are derived. It is found that an optimal tariff policy would have resulted in the highest level of economic welfare, while a quota would have reduced welfare, the latter result being due to the effect of a quota on firms' behavior. Relative to these policies, the trade restrictions actually imposed were too restrictive and hence failed to maximize economic welfare. Copyright 1993 by Royal Economic Society.

Suggested Citation

  • McCorriston, Steve & Sheldon, Ian, 1993. "Optimal Trade Policies: An Application to the UK Fertilizer Market," Oxford Economic Papers, Oxford University Press, vol. 45(1), pages 118-129, January.
    • Handle: RePEc:oup:oxecpp:v:45:y:1993:i:1:p:118-29
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    Cited by:

    1. Sheldon, Ian & McCorriston, Steve, 2014. "Climate Policy and Border Measures: The Case of the US Aluminum Industry," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169544, Agricultural and Applied Economics Association.
    2. Ian M. Sheldon, 2021. "Reflections on a Career as an Industrial Organization and International Economist," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 468-499, June.
    3. Coggins, Jay S., 1994. "Implementing Agricultural Policy Virtually: The Case of Set-Aside," Staff Papers 200579, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    4. Coggins, Jay S., 1994. "Trade and the Food Industries: Public and Social Choice," Staff Papers 200577, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

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