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The impact of US fresh milk production standards on dairy trade

Author

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  • P. Dorian Owen

    (Department of Economics, University of Otago)

  • Niven Winchester

    (Department of Economics, University of Otago and Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology)

Abstract

We analyse the impact of proposed changes in US legislation to allow greater use of dairy concentrate products in the production of fresh milk products. This change could potentially have a large impact on dairy trade as US tariffs on concentrated dairy products are low relative to average dairy tariffs. Our investigation builds a global model that identifies six dairy commodities and includes a detailed specification of the production of fresh milk products. We find that proposed changes in US legislation may lead to large proportional changes in US imports of concentrated milk products from some sources. However, as proposed changes in US regulations will only facilitate a small increase in the use of concentrated milk products in the production of fresh milk products, there are only small changes in global dairy production. We supplement results from our simulation model with a gravity analysis. Our results indicate that trade in concentrated milk products is positively related to aggregate dairy tariffs and negatively related to concentrated milk tariffs. This suggests that large tariffs on some dairy commodities influence the overall pattern of dairy trade.

Suggested Citation

  • P. Dorian Owen & Niven Winchester, 2011. "The impact of US fresh milk production standards on dairy trade," Working Papers 1117, University of Otago, Department of Economics, revised Dec 2011.
    • Handle: RePEc:otg:wpaper:1117
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    File URL: http://www.otago.ac.nz/economics/research/otago076675.pdf
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    4. 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.

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    More about this item

    Keywords

    dairy trade; concentrated milk products; non-tariff barriers; US milk production standards; numerical simulation; gravity modelling;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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