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Supply Management and Import Concessions

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  • James Vercammen
  • Andrew Schmitz

Abstract

Countries such as Canada, which manage domestic supply by regulating both production and imports, have come under pressure in recent years to liberalize their trade policy. This paper examines the effect of import concessions on the distribution of rents in supply-managed industries. Although import concessions decrease producer welfare, it is shown that rather sizable concessions may occur before producers are worse off under supply management than free trade. This is especially true in industries characterized by a low free-trade import share and inelastic demand. With regard to net social welfare, policies that are designed to transfer market rents to producers through supply management incur larger deadweight losses when they also incorporate import concessions.

Suggested Citation

  • James Vercammen & Andrew Schmitz, 1992. "Supply Management and Import Concessions," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 957-971, November.
    • Handle: RePEc:cje:issued:v:25:y:1992:i:4:p:957-71
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    Citations

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    Cited by:

    1. Al Mussell & Anatoliy Oginskyy & James F. Oehmke, 2009. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture: A Comment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 159-163, March.
    2. Schmitz Andrew & Schmitz Troy G., 2010. "Benefit-Cost Analysis: Distributional Considerations under Producer Quota Buyouts," Journal of Benefit-Cost Analysis, De Gruyter, vol. 1(1), pages 1-15, July.
    3. Schmitz, Troy G. & Schmitz, Andrew, 2012. "The Complexities of the Interface between Agricultural Policy and Trade," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 13(1), pages 1-12, February.
    4. G. Cornelis van Kooten, 2020. "Reforming Canada's Dairy Sector: USMCA and the Issue of Compensation," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(3), pages 542-558, September.
    5. Michael Katz & Joel F. Bruneau & Andrew Schmitz, 2008. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(2), pages 129-143, June.
    6. Gervais, Jean-Philippe, 1999. "Optimal trade policy, time consistency and uncertainty in an oligopsonistic world market," ISU General Staff Papers 1999010108000013564, Iowa State University, Department of Economics.
    7. Andrew Schmitz, 2008. "Canadian Agricultural Programs and Policy in Transition," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(4), pages 371-391, December.
    8. Brennan A. McLachlan & G. Cornelis van Kooten, 2022. "Reforming Canada's dairy supply management scheme and the consequences for international trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(1), pages 21-39, March.
    9. Larue, Bruno & Gervais, Jean-Philippe & Pouliot, Sebastien, 2007. "Should tariff-rate quotas mimic quotas?: Implications for trade liberalization under a supply management policy," The North American Journal of Economics and Finance, Elsevier, vol. 18(3), pages 247-261, December.
    10. Colin A. Carter & Pierre Mérel, 2016. "Hidden costs of supply management in a small market," Canadian Journal of Economics, Canadian Economics Association, vol. 49(2), pages 555-588, May.
    11. Joel F. Bruneau & Andrew Schmitz, 2009. "Identifying and Applying a Comparative Advantage Framework in Canadian Supply‐Managed Agriculture: Response," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 165-168, March.
    12. Schmitz, Andrew, 1995. "Political Economic Analysis in Agricultural Trade and Competitiveness," 1994 Conference, August 22-29, 1994, Harare, Zimbabwe 183393, International Association of Agricultural Economists.
    13. Schmitz Troy G. & Schmitz Andrew, 2002. "Food Supply Management and Tariffication: A Game Theoretic Approach," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-21, October.

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