IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp7988.html
   My bibliography  Save this paper

When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies

Author

Listed:
  • Ko, Chia Chiun

    (University of Queensland)

  • Frijters, Paul

    (London School of Economics)

Abstract

This paper examines the welfare loss of import restrictions on bananas in Australia and whether the import restrictions have turned into a particular form of export promotion. We set up a model in which there is free domestic entry, with banana producers accepting losses in normal years, off-set by large profits in years when cyclones destroy a large proportion of the banana plants because of sufficiently low elasticity of demand. Using the cyclones of 2006 and 2011 as exogenous events, we identify the elasticity of demand for bananas in Australia to be around -0.5. We indeed find limited evidence for an ‘over-shooting’ in terms of the supply response after these cyclones, leading to positive exports years after cyclones have hit and re-planted banana plants have become productive. Combining the elasticity estimates with information on turnover, we get an estimated welfare loss of 600 million dollars per year due to banana import restrictions.

Suggested Citation

  • Ko, Chia Chiun & Frijters, Paul, 2014. "When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies," IZA Discussion Papers 7988, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7988
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp7988.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Reza Oladi & John Gilbert, 2011. "Monopolistic Competition and North–South Trade," Review of International Economics, Wiley Blackwell, vol. 19(3), pages 459-474, August.
    2. Garcia Pires, Armando J., 2013. "Home market effects with endogenous costs of production," Journal of Urban Economics, Elsevier, vol. 74(C), pages 47-58.
    3. Armando Garcia Pires, 2012. "International trade and competitiveness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 727-763, August.
    4. Javelosa, Josyline C. & Schmitz, Andrew, 2006. "Costs and Benefits of a WTO Dispute: Philippine Bananas and the Australian Market," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 7(1), pages 1-26.
    5. Blazy, Jean-Marc & Carpentier, Alain & Thomas, Alban, 2011. "The willingness to adopt agro-ecological innovations: Application of choice modelling to Caribbean banana planters," Ecological Economics, Elsevier, vol. 72(C), pages 140-150.
    6. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, March.
    7. Anke Leroux & Donald Maclaren, 2011. "The Optimal Time to Remove Quarantine Bans Under Uncertainty: The Case of Australian Bananas," The Economic Record, The Economic Society of Australia, vol. 87(276), pages 140-152, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mujcic, Redzo, 2014. "Are fruit and vegetables good for our mental and physical health? Panel data evidence from Australia," MPRA Paper 59149, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chia Chiun Ko & Paul Frijters & Gigi Foster, 2018. "A Tale of Cyclones, Exports and Surplus Forgone in Australia's Protected Banana Industry," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 276-300, September.
    2. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.
    3. Giuliani, Elisa & Martinelli, Arianna & Rabellotti, Roberta, 2016. "Is Co-Invention Expediting Technological Catch Up? A Study of Collaboration between Emerging Country Firms and EU Inventors," World Development, Elsevier, vol. 77(C), pages 192-205.
    4. Jarle Aarstad & Olav Andreas Kvitastein & Stig-Erik Jakobsen, 2019. "What Drives Enterprise Product Innovation? Assessing How Regional, National, And International Inter-Firm Collaboration Complement Or Substitute For R&D Investments," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-25, June.
    5. Altorjai, Szilvia, 2013. "Over-qualification of immigrants in the UK," ISER Working Paper Series 2013-11, Institute for Social and Economic Research.
    6. Sara Serra, 2016. "Temporary contracts' transitions: the role of training and institutions," Working Papers w201611, Banco de Portugal, Economics and Research Department.
    7. Robert A. Jackson & Matthew Pietryka, 2022. "The influence of becoming a parent on political participation in the United States," Social Science Quarterly, Southwestern Social Science Association, vol. 103(3), pages 565-580, May.
    8. Ridier, Aude & Roussy, Caroline & Chaib, Karim, 2021. "Adoption of crop diversification by specialized grain farmers in south-western France: evidence from a choice-modelling experiment," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 102(1), April.
    9. Tocco, Barbara & Bailey, Alastair & Davidova, Sophia & Raimondi, Valentina, 2015. "Women and Part-Time Farming: Understanding Labor Supply Decisions in Italian Farm Households," 2015 Conference, August 9-14, 2015, Milan, Italy 211932, International Association of Agricultural Economists.
    10. Costa-Font, Joan & Vilaplana-Prieto, Cristina, 2022. "Health shocks and housing downsizing: How persistent is ‘ageing in place’?," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 490-508.
    11. Amitrajeet A. Batabyal & Hamid Beladi, 2019. "Preference matching, income, and population distribution in urban and adjacent rural regions," Papers in Regional Science, Wiley Blackwell, vol. 98(5), pages 2201-2208, October.
    12. Guillaume Claveres & Thomas Y. Mathä & Giuseppe Pulina & Jan Stráský & Nicolas Woloszko & Michael Ziegelmeyer, 2020. "Housing and inequality: The case of Luxembourg and its cross-border workers," BCL working papers 144, Central Bank of Luxembourg.
    13. Hanna Dudek & Joanna Myszkowska-Ryciak & Agnieszka Wojewódzka-Wiewiórska, 2021. "Profiles of Food Insecurity: Similarities and Differences across Selected CEE Countries," Energies, MDPI, vol. 14(16), pages 1-19, August.
    14. Yuejia Zhang, 2018. "Gain or pain? New evidence on mixed syndication between governmental and private venture capital firms in China," Small Business Economics, Springer, vol. 51(4), pages 995-1031, December.
    15. Valeria Di Cosmo & Laura Malaguzzi Valeri, 2018. "How Much Does Wind Power Reduce $$\text {CO}_{2}$$ CO 2 Emissions? Evidence from the Irish Single Electricity Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 645-669, November.
    16. Alobo Loison, Sarah & Hillbom, Ellen, 2020. "Regional evidence of smallholder-based growth in Zambia’s livestock sector," World Development Perspectives, Elsevier, vol. 19(C).
    17. Nilsson, Jerker & Helgesson, Matilda & Rommel, Jens & Svensson, Ellinor, 2020. "Forest-owner support for their cooperative's provision of public goods," Forest Policy and Economics, Elsevier, vol. 115(C).
    18. Tocco, Barbara & Bailey, Alastair & Davidova, Sophia, 2013. "Determinants to Leave Agriculture and Change Occupational Sector: Evidence from an Enlarged EU," Working papers 155704, Factor Markets, Centre for European Policy Studies.
    19. Bertoli, Simone & Marchetta, Francesca, 2015. "Bringing It All Back Home – Return Migration and Fertility Choices," World Development, Elsevier, vol. 65(C), pages 27-40.
    20. Cecere, Grazia & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Waste prevention and social preferences: the role of intrinsic and extrinsic motivations," Ecological Economics, Elsevier, vol. 107(C), pages 163-176.

    More about this item

    Keywords

    competition; import restrictions; exogenous shocks; instrumental variables; surplus;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7988. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.