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Imperfect Competition, Trade Policies, and Technological Changes in the Orange Juice Market

Author

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  • Dhamodharan, Mahalingam
  • Devadoss, Stephen
  • Luckstead, Jeff

Abstract

Orange juice processors in Florida face stiff competition from São Paulo processors. The United States imposes a specific import tariff to protect domestic processors. São Paulo processors also export to the European Union, which imposes an ad valorem tariff on orange juice. Under oligopolistic competition with endogenous firm entry and exit, this paper analyzes how the changes in tariff policy and productivity impact the market structure in Florida and São Paulo; prices; quantities; and welfare in the United States, Brazil, and the European Union. Free trade and an increase in São Paulo productivity benefit U.S. and EU consumers and São Paulo processors. In contrast, U.S. tariff reduction adversely impacts Florida processors.

Suggested Citation

  • Dhamodharan, Mahalingam & Devadoss, Stephen & Luckstead, Jeff, 2016. "Imperfect Competition, Trade Policies, and Technological Changes in the Orange Juice Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(2), May.
    • Handle: RePEc:ags:jlaare:235152
    DOI: 10.22004/ag.econ.235152
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    References listed on IDEAS

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    1. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    2. Wang, Honglin & Xiang, Qing & Reardon, Thomas, 2006. "Market Power and Supply Shocks: Evidence from the Orange Juice Market," Staff Paper Series 11508, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Nathalie Lavoie, 2005. "Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 835-854.
    4. Luckstead, Jeff & Devadoss, Stephen & Mittelhammer, Ron, 2015. "Imperfect Competition between Florida and Sao Paulo (Brazil) Orange Juice Producers in the U.S. and European Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(1), pages 1-15.
    5. Brown, Mark G. & Spreen, Thomas H. & Lee, Jonq-Ying, 2004. "Impacts On U.S. Prices Of Reducing Orange Juice Tariffs In Major World Markets," Journal of Food Distribution Research, Food Distribution Research Society, vol. 35(2), pages 1-8, July.
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    Cited by:

    1. Sabala, Ethan & Devadoss, Stephen, 2021. "Analysis of Chinese Tariff on Sorghum Market under Varying Market Structures," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(1), January.

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