Trade and Efficiency Effects of Domestic Content Protection: The Australian Tobacco and Cigarette Industries
This paper provides an empirical investigation into the international trade and domestic market efficiency effects of physical domestic content requirements in the Australian tobacco leaf growing and cigarette manufacturing industries. The authors' empirical evidence suggests that the content requirement has distorted trade by restricting leaf imports. Nevertheless, the data are also consistent with the efficient contract hypothesis. The mix of domestic to imported leaf used in cigarette manufacturing depends on domestic leaf production costs and on world leaf prices but not on the negotiated domestic leaf price. Copyright 1993 by MIT Press.
Volume (Year): 75 (1993)
Issue (Month): 4 (November)
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