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State Trading Enterprises as an Impediment to Improved Market Access: The Case of the Korean Rice Market

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  • Steve McCorriston
  • Donald MacLaren

Abstract

The trade and welfare effects of tariffs are well known. Less well known, and more difficult to analyze, are the economic effects of state trading enterprises (STEs). Despite STEs in importing countries having the potential to limit market access, they are no longer on the agriculture agenda in the Doha Round Negotiations in the WTO, because some Members have asserted that importing STEs do not distort international trade. We evaluate this assertion through the use of a theoretical model of an STE, which is calibrated to data for the Korean rice market. We show that this STE does distort international trade by restricting market access relative to a Cournot benchmark, and that it affects the domestic and international distribution of social welfare. This finding permits the conclusion that an important opportunity is being missed in the negotiations to improve market access, because importing STEs are not on the agenda.

Suggested Citation

  • Steve McCorriston & Donald MacLaren, 2008. "State Trading Enterprises as an Impediment to Improved Market Access: The Case of the Korean Rice Market," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 431-443, August.
    • Handle: RePEc:bla:reviec:v:16:y:2008:i:3:p:431-443
    DOI: 10.1111/j.1467-9396.2007.00713.x
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    References listed on IDEAS

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    1. McCorriston, Steve & MacLaren, Donald, 2005. "The trade distorting effect of state trading enterprises in importing countries," European Economic Review, Elsevier, vol. 49(7), pages 1693-1715, October.
    2. Chi‐Chur Chao & Eden S. H. Yu, 2006. "Partial Privatization, Foreign Competition, and Optimum Tariff," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 87-92, February.
    3. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 264-281, October.
    4. Dae-Seob Lee & P. Lynn Kennedy, 2006. "A Political Economic Analysis of U.S. Rice Export Programs to Japan and South Korea: A Game-Theoretic Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 420-431.
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    Cited by:

    1. Yoon, Jung-Hyun & Lim, Song Soo, 2013. "Potential trade distortion effects of state trading enterprises under the tariff-rate quota scheme," Economics Discussion Papers 2013-22, Kiel Institute for the World Economy (IfW Kiel).
    2. Steve McCorriston & Donald MacLaren, 2010. "The Trade and Welfare Effects of State Trading in China with Reference to COFCO," The World Economy, Wiley Blackwell, vol. 33(4), pages 615-632, April.

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