AN ECONOMIC MODEL OF U.S. IMPORTS OF BUTTER AND MILK FAT PRODUCTS

Kenneth W. Bailey and Zhen Wu

No 18846, Staff Paper Series from Pennsylvania State University, Department of Agricultural Economics and Rural Sociology

Abstract: This study developed a model to explain monthly imports of butter and butter substitutes. The U.S. imports butter and other high milk fat products that can substitute for a strict definition of butter. These products include dairy spreads, butter substitutes, anhydrous milk fat, and food preparations. The U.S. imports these high milk fat products under a tariff-rate quota system (TRQ) implemented by the World Trade Organization (WTO). This study quantified all the milk fat contained in U.S. butter and butter substitute imports. A conceptual model was developed to explain imports of these products under a TRQ system. And an econometric model was estimated to analyze the economic factors that drive over-quota imports. The model found that the wedge between U.S. and world butter prices explains much of the incentive to import overquota butter and butter substitutes.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 25
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:psusps:18846

DOI: 10.22004/ag.econ.18846

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