Improving Market Access: The Role of Auctions in Converting Tariff-Rate Quotas into Single Tariffs
AbstractMarket access in the WTO is highly fragmented due to exceptions from GATT principles. Tariff-rate quotas (TRQs) stand in contradiction to the principle of the GATT, according to which all quantitative restrictions in international trade should be eliminated. Bhagwati’s theorem of the non-equivalence of tariffs and quotas leads to the conclusion that under imperfect competition, market access can be improved by converting TRQs into single tariffs. In order to find the ‘new’ tariff, Bergsten (1987) proposed to auction quotas and to use the realized auction price for setting the equivalent tariff. There is empirical evidence from auctions of TRQs in Switzerland that the observed auction prices are below the equivalent tariffs. This is in line with the analysis of McAfee et al. (1999) that auction prices are considered as a useful lower bound for determining the equivalent tariffs. A change from quotas to tariffs will hardly raise protection but it may reduce price support by the new tariff. As a consequence, a country which replaces TRQs by single tariffs through auctions, in so doing, has already reduced tariffs to some extent. Finally, it is important that auctions are competitive and collusion among bidders can be prevented. In this regard, Lengwiler (1999) recommends the ‘variable supply’ auction format which resists collusion. This anti-collusive mechanism ensures competitive auctions in the event of high buyer’s concentration and imperfect competition.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51448.
Date of creation: Aug 2009
Date of revision:
WTO; Market Access; Imperfect Competition; Auctions; International Relations/Trade; Political Economy; Q17; F13; D44;
Find related papers by JEL classification:
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yvan Lengwiler, 1998.
"The multiple unit auction with variable supply,"
Finance and Economics Discussion Series
1998-28, Board of Governors of the Federal Reserve System (U.S.).
- Robert Jörin & Yvan Lengwiler, 2004. "Learning from Financial Markets: Auctioning Tariff-Rate Quotas in Agricultural Trade," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 140(IV), pages 521-541, December.
- Daniel Heller & Yvan Lengwiler, 2001. "Should the Treasury Price Discriminate?. A Procedure for Computing Hypothetical Bid Functions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(3), pages 413-, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.