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The Liberalization Of Tariff Rate Quotas Under Oligopolistic Competition

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  • Scoppola, Margherita

Abstract

The paper develops a two-stage capacity constrained model, in which the mode of competition is endogenous and the constraint is flexible, to investigate the impact of Tariff Rate Quotas (TRQs) and of different liberalization options in oligopolistic markets. The model predicts that the equilibrium moves from a pure Bertrand outcome to a Cournot outcome as the effectiveness of the capacity constraint increase, that is, as the gap between the cost of the licences plus the in-quota tariff and the out-of-quota tariff increases. The results show that the impacts of the various liberalization options - the expansion of quotas by means of an increase in the number of operators or in the quota allocated to incumbents, the reduction in the in-quota and out-of-quota tariffs and improvements in the TRQ administration system - are rather diverse from those predicted by models assuming perfect competition.

Suggested Citation

  • Scoppola, Margherita, 2008. "The Liberalization Of Tariff Rate Quotas Under Oligopolistic Competition," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44822, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa109:44822
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    References listed on IDEAS

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    1. Fengxia Dong & Thomas L. Marsh & Kyle W. Stiegert, 2006. "State Trading Enterprises in a Differentiated Product Environment: The Case of Global Malting Barley Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 90-103.
    2. Maria Priscila Ramos & Jean-Christophe Bureau & Luca Salvatici, 2010. "Trade composition effects of the EU tariff structure: beef imports from Mercosur," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 37(1), pages 1-26, March.
    3. Maggi, Giovanni, 1996. "Strategic Trade Policies with Endogenous Mode of Competition," American Economic Review, American Economic Association, vol. 86(1), pages 237-258, March.
    4. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, November.
    5. James I. Rude & Jean-Philippe Gervais, 2006. "Tariff-Rate Quota Liberalization: The Case of World Price Uncertainty and Supply Management," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(1), pages 33-54, March.
    6. Carter, Colin A & MacLaren, Donald, 1997. "Price or Quantity Competition? Oligopolistic Structures in International Commodity Markets," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 373-385, August.
    7. Jean-Philippe Gervais & David Surprenant, 2000. "An Economic Investigation of the Import Licensing Methods and TRQs in Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 48(4), pages 397-410, December.
    8. Nathalie Lavoie, 2005. "Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 835-854.
    9. David M. Kreps & Jose A. Scheinkman, 1983. "Quantity Precommitment and Bertrand Competition Yield Cournot Outcomes," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 326-337, Autumn.
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    Cited by:

    1. Abbassi, Abdessalem & Tamini, Lota D. & Dakhlaoui, Ahlem, 2015. "Import quota allocation between regions under Cournot competition," Economic Modelling, Elsevier, vol. 51(C), pages 484-490.

    More about this item

    Keywords

    Agricultural and Food Policy; Industrial Organization; International Relations/Trade;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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