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An Economic Model Of U.S. Imports Of Butter And Milk Fat Products

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  • Bailey, Kenneth W.
  • Wu, Zhen

Abstract

This study developed a model to explain monthly imports of butter and butter substitutes. The U.S. imports butter and other high milk fat products that can substitute for a strict definition of butter. These products include dairy spreads, butter substitutes, anhydrous milk fat, and food preparations. The U.S. imports these high milk fat products under a tariff-rate quota system (TRQ) implemented by the World Trade Organization (WTO). This study quantified all the milk fat contained in U.S. butter and butter substitute imports. A conceptual model was developed to explain imports of these products under a TRQ system. And an econometric model was estimated to analyze the economic factors that drive over-quota imports. The model found that the wedge between U.S. and world butter prices explains much of the incentive to import overquota butter and butter substitutes.

Suggested Citation

  • Bailey, Kenneth W. & Wu, Zhen, 2005. "An Economic Model Of U.S. Imports Of Butter And Milk Fat Products," Staff Paper Series 18846, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    • Handle: RePEc:ags:psusps:18846
    DOI: 10.22004/ag.econ.18846
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    References listed on IDEAS

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    1. Bailey, Kenneth W., 2002. "Implications of Dairy Imports: The Case of Milk Protein Concentrates," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(2), pages 248-259, October.
    2. Larry Salathe & William D. Dobson & Gustof A. Peterson, 1977. "Analysis of the Impact of Alternative U.S. Dairy Import Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(3), pages 496-506.
    3. Bailey, Kenneth W., 2002. "Implications of Dairy Imports: The Case of Milk Protein Concentrates," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(2), pages 1-12, October.
    4. Novakovic, Andrew M. & Thompson, Robert L., 1977. "The Impact Of Imports Of Manufactured Milk Products On The U.S. Dairy Industry," 1977 AAEA-WAEA Joint Meeting, July 31-August 3, San Diego, California 283628, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Gehrke, Brad C. & Babula, Ronald A. & Coleman, Jonathan R., 2004. "An Analysis of the Impact of European Union and United States Dairy Policies on EU-U.S. Trade in Milk Protein Concentrate," Working Paper ID Series 15875, United States International Trade Commission, Office of Industries.
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    Keywords

    International Relations/Trade;

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