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The price disparity analysis revisited: An application to pork imports in Japan

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  • Onji, Kazuki

Abstract

The effect of tariff evasion on price formations is relevant in understanding the welfare consequence of illicit trades. Previous empirical studies demonstrate that tax evasion reduces the effects of tariffs on equilibrium prices, but admit an alternative explanation: traders bore the incidence. This paper aims to refine the price disparity analysis to allow for that explanation. An application considers the market for imported pork parts in Japan to exploit the variation in tariff rates over time and across products. Using novel data on monthly wholesale prices on narrowly-defined pork products from 2001 through 2012, I find that a widespread evasion nullified safeguard tariffs almost fully. An alternative identification strategy corroborates the evidence on widespread evasion: An upper bound estimate on the total amount of tariffs evaded is 5.5 times as much as the collected revenue. Additionally, the result indicates that a tougher enforcement reduces evasions.

Suggested Citation

  • Onji, Kazuki, 2014. "The price disparity analysis revisited: An application to pork imports in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 1-23.
    • Handle: RePEc:eee:jjieco:v:34:y:2014:i:c:p:1-23
    DOI: 10.1016/j.jjie.2014.03.004
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    Cited by:

    1. Satoshi Nakano & Kazuhiko Nishimura, 2024. "On estimating Armington elasticities for Japan's meat imports," Journal of Agricultural Economics, Wiley Blackwell, vol. 75(1), pages 189-200, February.
    2. Jaciel Ramsés Méndez-León & Dena María Jesús Camarena-Gómez & Lizbeth Salgado-Beltrán, 2023. "Competitive Positioning of Mexican Pork in Japan," Agriculture, MDPI, vol. 13(2), pages 1-12, February.
    3. Satoshi Nakano & Kazuhiko Nishimura, 2022. "On estimating Armington elasticities for Japan's meat imports," Papers 2210.05358, arXiv.org, revised Oct 2022.

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    More about this item

    Keywords

    Tax evasion; Tax incidence; Agricultural safeguard;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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