The Special Safeguard Mechanism (SSM) and Tariffs: Price Behaviour with Imperfectly Competitive Market Intermediaries
The SSM is a proposal from the G-33 Group in the Doha Round negotiations in which developing countries would be allowed to use contingent tariffs to control import surges of food commodities and/or downward spikes in their border prices. The principal objective is to safeguard the livelihood security of farm households in these countries. A stochastic partial equilibrium model of a typical importing country situation is specified in which there are either imperfectly competitive, domestic intermediaries or a parastatal. Using Monte Carlo simulation, it is found that the objective of the SSM is unlikely to be met.
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