Import sensitive products and perverse tariff‐rate quota liberalization

Sebastien Pouliot () and Bruno Larue

Canadian Journal of Economics/Revue canadienne d'économique, 2012, vol. 45, issue 3, 903-924

Abstract: Abstract This paper shows that a Tariff‐Rate‐Quota's (TRQ) minimum access expansion can perversely trigger domestic price increases. Often, TRQs have prohibitive over‐quota tariffs to mimic import quotas in providing minimum market access. In the WTO's Doha Round, it is likely that countries using TRQs will avoid aggressive tariff reductions if they increase the quota portion of TRQs. We show that when the import price lies between the unit cost of production and the price received by domestic upstream firms, an increase in import quota as a share of domestic production may cause an increase in the domestic retail price. Une expansion de l’accès minimum au marché d’un contingent tarifaire (CT) peut générer des augmentations perverses de prix internes. Souvent, les CT ont des tarifs hors‐contingent prohibitifs pour reproduire les effets des quotas à l’importation tout en garantissant un accès minimum au marché. Dans le cycle de Doha de l’OMC, il est probable que les pays utilisant des CT vont pouvoir éviter des réductions importantes de tarifs si le contingent des CT est augmenté. Nous montrons qu’une augmentation du contingent défini comme une fraction de la production interne peut engendrer une augmentation du prix interne des détaillants si le prix des importations se situe entre le coût unitaire de production et le prix interne des firmes en amont.

Date: 2012
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Citations: View citations in EconPapers (4)

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https://doi.org/10.1111/j.1540-5982.2012.01720.x

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Journal Article: Import sensitive products and perverse tariff-rate quota liberalization (2012)
Working Paper: Import Sensitive Products and Perverse Tariff-Rate Quota Liberalization (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:45:y:2012:i:3:p:903-924

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