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The Effects of Vertical Markets on Trade Policy Reform

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  • McCorriston, Steve
  • Sheldon, Ian M

Abstract

Typically, analysis of trade liberalization ignores the impact that intermediate stages in the production and distribution system may have on the pass-through of changes in tariffs to final goods' prices. Using a model of a multistage system, this paper shows that both the number of vertical stages and the degree of imperfect competition at any specific stage can affect the degree of tariff pass-through. Simulation of the model with respect to recent changes in the European Union banana regime suggests that ignoring vertical market structure is likely to overestimate the benefits to consumers of trade liberalization. Copyright 1996 by Royal Economic Society.

Suggested Citation

  • McCorriston, Steve & Sheldon, Ian M, 1996. "The Effects of Vertical Markets on Trade Policy Reform," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 664-672, October.
  • Handle: RePEc:oup:oxecpp:v:48:y:1996:i:4:p:664-72
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    Cited by:

    1. Pierluigi Montalbano & Rebecca Pietrelli & Luca Salvatici, 2017. "Market chain participation and food security: the case of the Ugandan maize farmers," Working Papers 2/17, Sapienza University of Rome, DISS.
    2. Djuric, Ivan & Götz, Linde, 2016. "Export restrictions – Do consumers really benefit? The wheat-to-bread supply chain in Serbia," Food Policy, Elsevier, vol. 63(C), pages 112-123.
    3. Lodovico Muratori, 2016. "Price Gap along the Ugandan Coffee Value Chain," Working Papers 1/16, Sapienza University of Rome, DISS.
    4. Anania, Giovanni & Scoppola, Margherita, 2014. "Modeling trade policies under alternative market structures," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 185-206.
    5. Desquilbet, Marion & Guyomard, Herve, 1999. "Public Policy In Vertically Related Markets: A Cournot Oligopoly-Oligopsony Model," 1999 Annual meeting, August 8-11, Nashville, TN 21561, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Carmen Florido & Ana Aldanondo & Marta Jacob, 2002. "Firm Behaviour and Interaction in the European Banana Market: 1960-1993," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 319-344.
    7. Rosa, Franco & Weaver, Robert D. & Vasciaveo, Michela, 2015. "Structural Changes and Dairy Chain Efficiency in Italy," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 6(3).
    8. Johan Swinnen & Anneleen Vandeplas, 2014. "Price Transmission and Market Power in Modern Agricultural Value Chains," LICOS Discussion Papers 34714, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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