Intra-Industry Trade, Imperfect Competition, Trade Integration and Invasive Species Risk
We analyze the linkage between protectionism and invasive species hazard in the context of imperfect competition, two-way trade, and multilateral trade liberalization, three major actual features of agricultural trade and policies in the real world. We revisit the reciprocal-dumping model with differentiated products, adding trade and agricultural policies into the framework in the presence of invasive-species risk associated with agriculture. We look at joint reduction of agricultural tariffs. This type of trade integration is much more likely to increase the damage from invasive species than predicted by unilateral trade liberalization under the classical HOS framework. We document the non-monotonic relationship between policy (trade barriers and farm subsidies) and the expected damages from invasive species. We illustrate our analytical results with a stylized model of the world wheat market.
|Date of creation:||2004|
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- James Brander & Paul Krugman, 1982.
"A 'Reciprocal Dumping' Model of International Trade,"
513, Queen's University, Department of Economics.
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- Jagdish Bhagwati (ed.), 2002. "Going Alone: The Case for Relaxed Reciprocity in Freeing Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025213, June.
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- J. D. Mumford, 2002. "Economic issues related to quarantine in international trade," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 329-348, July.
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- Christopher Costello & Carol McAusland, 2003. "Protectionism, Trade, and Measures of Damage from Exotic Species Introductions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 964-975.
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