Import Sensitive Products and Perverse Tariff-Rate Quota Liberalization

Sebastien Pouliot () and Bruno Larue

Staff General Research Papers Archive from Iowa State University, Department of Economics

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.

JEL-codes: F13 Q17 (search for similar items in EconPapers)
Date: 2012-08-13
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Citations: View citations in EconPapers (15)

Published in Canadian Journal of Economics, August 2012, vol. 45 no. 3, pp. 903-924

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Journal Article: Import sensitive products and perverse tariff-rate quota liberalization (2012)
Journal Article: Import sensitive products and perverse tariff‐rate quota liberalization (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:34570

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