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The Optimal Time to Remove Quarantine Bans Under Uncertainty: The Case of Australian Bananas

Author

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  • ANKE LEROUX
  • DONALD MACLAREN

Abstract

Import restrictions on biological materials are used widely as protection against exotic invasive pests and pathogens. While a scientific risk assessment is needed to justify an import ban under the WTO SPS Agreement, economics plays little role in determining the choice of import regime. Using a real option framework, we model the uncertain and irreversible costs from lifting an import ban and derive decision rules about the optimal timing, when ex ante research and development yields positive but uncertain benefits. The insights gained are applied to Australia's current import policy for bananas.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:ecorec:v:87:y:2011:i:276:p:140-152
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    File URL: http://hdl.handle.net/10.1111/j.1475-4932.2010.00690.x
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    References listed on IDEAS

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    Cited by:

    1. David Adamson & David Cook, 2007. "Re-examining economic options for import risk assessments," Murray-Darling Program Working Papers WP3M07, Risk and Sustainable Management Group, University of Queensland.
    2. Ghose, Devaki & Pinheiro Fraga, Eduardo & Fernandes, Ana Margarida, 2023. "Trade Policy and Access to Intermediate Inputs : Quantifying the Welfare Costs of a Fertilizer Shortage," Policy Research Working Paper Series 10642, The World Bank.
    3. 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.
    4. Ko, Chia Chiun & Frijters, Paul, 2014. "When Banana Import Restrictions Lead to Exports: A Tale of Cyclones and Quarantine Policies," IZA Discussion Papers 7988, IZA Network @ LISER.
    5. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment

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