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An Economic Evaluation Of The New Agricultural Trade Negotiations: A Nonlinear Imperfectly Competitive Spatial Equilibrium Approach

Author

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  • Maeda, Koushi
  • Suzuki, Xohuhiro
  • Kaiser, Harry M.

Abstract

The objective of the research reported here is to develop a more flexible and comprehensive policy simulation model for imperfectly competitive international agricultural trade with various trade and domestic support policies. The model is a nonlinear imperfectly competitive spatial equilibrium model formulated as a MCP. The model is flexible in that it can simulate the economic effects of the following trade policies: specific duties, ad valorem tariffs, tariff-rate quotas, export subsidies, production subsidies, production quotas, consumption taxes and price floor, combined with various imperfectly competitive market structures. The usefulness of the model is demonstrated with an application to international wheat trade simulated under several alternative scenarios based on proposals of major countries as well as the agreement between China and the United States on China's participation in the 11'70. The main empirical findings are as follows. Keeping the committed 1000 support levels under the current WTO agricultural agreements would be favorable for wheat producers in tile European Community and Canada, but harmful to the United States w-heat sector. There would be little structural change in the world wheat trade in a case where China joins the WTO, keeping the other countries' policies at the committed 2000 support levels. Likewise, little structural change would occur in the case where the new WTO agricultural negotiations result in agreements favorable for importing countries. However, world wheat trade would drastically change under full trade liberalization. In this case, the European Community switches from the world's leading net exporter to the world's leading net importer of wheat. Also, China and India would become major net exporting countries, and net exports by the United States, Canada, and the Cairns group such as Australia and Argentina would expand tinder full trade liberalization.

Suggested Citation

  • Maeda, Koushi & Suzuki, Xohuhiro & Kaiser, Harry M., 2001. "An Economic Evaluation Of The New Agricultural Trade Negotiations: A Nonlinear Imperfectly Competitive Spatial Equilibrium Approach," Working Papers 7231, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:7231
    DOI: 10.22004/ag.econ.7231
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    References listed on IDEAS

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    1. Tsunemasa Kawaguchi & Nobuhiro Suzuki & Harry M. Kaiser, 1997. "A Spatial Equilibrium Model for Imperfectly Competitive Milk Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 851-859.
    2. Nobuhiro Suzuki & John E. Lenz & Olan D. Forker, 1993. "A Conjectural Variations Model of Reduced Japanese Milk Price Supports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 210-218.
    3. Iwata, Gyoichi, 1974. "Measurement of Conjectural Variations in Oligopoly," Econometrica, Econometric Society, vol. 42(5), pages 947-966, September.
    4. Anderson, Kym & Dimaranan, Betina V. & Hertel, Thomas W. & Martin, William J., 1997. "Asia-Pacific food markets and trade in 2005: a global, economy-wide perspective," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(01), pages 1-26.
    5. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
    6. Thomas L. Cox & Jonathan R. Coleman & Jean-Paul Chavas & Yong Zhu, 1999. "An Economic Analysis of the Effects on the World Dairy Sector of Extending Uruguay Round Agreement to 2005," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(5), pages 169-183, December.
    7. Daniel Ralph, 1994. "Global Convergence of Damped Newton's Method for Nonsmooth Equations via the Path Search," Mathematics of Operations Research, INFORMS, vol. 19(2), pages 352-389, May.
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    1. Maeda, Koushi & Suzuki, Nobuhiro & Kaiser, Harry M., 2001. "Measuring the Effects of Eliminating State Trading Enterprises on the World Wheat Sector," Working Papers 127664, Cornell University, Department of Applied Economics and Management.
    2. Anna Nagurney & Deniz Besik & Ladimer S. Nagurney, 2019. "Global supply chain networks and tariff rate quotas: equilibrium analysis with application to agricultural products," Journal of Global Optimization, Springer, vol. 75(2), pages 439-460, October.

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