IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Production Cost Asymmetry, Minimum Access and Reciprocal Dumping

  • Abdessalem Abbassi
  • Lota D. Tamini
  • Ahlem Dakhlaoui

In this article we propose a bilateral dumping model in which the minimum access level is endogenous. Regions compete with one another using Cournot conjectures and engage in interregional dumping as in Brander and Krugman’s (1983) reciprocal dumping model. International trade is hindered by restrictive Tariff rate Quota (TRQs). The model features two regions and one product. We derive the conditions under which it is optimal to observe interregional trade and those under which trade does not exist. The results show that the world price and the difference in production costs between regions play an important role in determining whether bilateral trade exists. In the presence of bilateral trade, the region with the largest market size will obtain the largest share of import volumes permitted under the minimum access system while in the absence of interregional trade, the distribution of import permits between regions will also depends on the product cost asymmetry. When only the most efficient region exports to the least efficient region, production costs asymmetry, transaction costs and world price level determine whether the smaller or larger region obtains the larger share of product import allowed under minimum access commitment. In all cases, we show that in a country like Canada, creation of “artificial barriers” to interprovincial trade of products under supply management system lowers the welfare of at least one of the regions, along with the global welfare.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://www.create.ulaval.ca/sites/create.ulaval.ca/files/Publications/create2013-7.pdf
Download Restriction: no

Paper provided by CREATE in its series Cahiers de recherche CREATE with number 2013-7.

as
in new window

Length:
Date of creation: 2013
Date of revision:
Handle: RePEc:lvl:creacr:2013-7
Contact details of provider: Postal: Faculté des sciences de l'agriculture et de l'alimentation, Pavillon Paul-Comtois, 2425 rue de l'Agriculture, local 4424, Québec, Qc, G1V 0A6
Phone: 418-656-2131 poste 5098
Fax: 418-656-7821
Web page: http://www.create.ulaval.ca
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Kathy Baylis & Hartley Furtan, 2003. "Free-Riding on Federalism: Trade Protection and the Canadian Dairy Industry," Canadian Public Policy, University of Toronto Press, vol. 29(2), pages 145-161, June.
  2. Haufler, Andreas & Wooton, Ian, 1999. "Country size and tax competition for foreign direct investment," Munich Reprints in Economics 20408, University of Munich, Department of Economics.
  3. NEARY, J. Peter & THARAKAN, Joe, . "International trade with endogenous mode of competition in general equilibrium," CORE Discussion Papers RP -2430, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Kamal Saggi & Halis Murat Yildiz, 2011. "Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade," Review of International Economics, Wiley Blackwell, vol. 19(2), pages 356-373, 05.
  5. James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc.
  6. Pouliot, Sebastien & Larue, Bruno, 2012. "Import Sensitive Products and Perverse Tariff-Rate Quota Liberalization," Staff General Research Papers 34570, Iowa State University, Department of Economics.
  7. Maggi, Giovanni & Rodriguez-Clare, Andres, 2000. "Import penetration and the politics of trade protection," Journal of International Economics, Elsevier, vol. 51(2), pages 287-304, August.
  8. Neary, J Peter, 2002. "Foreign Competition and Wage Inequality," CEPR Discussion Papers 3420, C.E.P.R. Discussion Papers.
  9. Chi-Chur Chao & Bharat R. Hazari & Eden S. H. Yu, 2010. "Quotas, Spillovers, and the Transfer Paradox in an Economy with Tourism," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 243-249, 05.
  10. Liang, Wen-Jung & Hwang, Hong & Mai, Chao-Cheng, 2006. "Spatial discrimination: Bertrand vs. Cournot with asymmetric demands," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 790-802, November.
  11. J. Peter Neary, 2003. "Presidential Address: Globalization and Market Structure," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 245-271, 04/05.
  12. Jean-Philippe Gervais & Harvey E. Lapan, 2001. "Optimal Production Tax and Quota under Time Consistent Trade Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 921-933.
  13. Hartley Furtom & Johannes Sauer & Maria Jensen, 2009. "Free-riding on rent seeking—an empirical analysis," Public Choice, Springer, vol. 140(3), pages 479-500, September.
  14. Hartley Furtan & Johannes Sauer & Maria Jensen, 2009. "Free-riding on rent seeking—an empirical analysis," Public Choice, Springer, vol. 140(3), pages 501-501, September.
  15. Lambert, Remy, 2012. "A Primer on the Economics of Supply Management and Food Supply Chains," Working Papers 125246, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lvl:creacr:2013-7. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Johanne Perron)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.