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Selling Import Quota Licenses: The U.S. Cheese Case

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  • Steve McCorriston
  • Ian M. Sheldon

Abstract

Recent discussions on U.S. trade policies suggest that import quotas should be auctioned to ensure the U.S. Treasury acquires the quota rent. However, studies estimating the potential benefits have ignored important details of import quota regimes and have assumed perfect competition and no exporter retaliation. We explore these three issues with an application to the U.S. cheese import quota regime. We show that when features of the U.S. dairy quota regime and structure of the cheese processing sector are accounted for, likely quota rents and potential welfare consequences of selling import licenses change significantly. While quota license sales may raise Treasury receipts, they may also cause a net welfare loss.

Suggested Citation

  • Steve McCorriston & Ian M. Sheldon, 1994. "Selling Import Quota Licenses: The U.S. Cheese Case," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 818-827.
    • Handle: RePEc:oup:ajagec:v:76:y:1994:i:4:p:818-827.
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    File URL: http://hdl.handle.net/10.2307/1243743
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    Citations

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    Cited by:

    1. Ian M. Sheldon, 2021. "Reflections on a Career as an Industrial Organization and International Economist," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 468-499, June.
    2. Bullock, David S. & Salhofer, Klaus, 2003. "Judging agricultural policies: a survey," Agricultural Economics, Blackwell, vol. 28(3), pages 225-243, May.
    3. Bullock, David S. & Dadakas, Dimitrios & Katranidis, Stelios D., 2009. "Measuring the Effects of Technology Change in Multiple Markets : Application to the Greek Cotton Yarn Industry," MPRA Paper 67204, University Library of Munich, Germany, revised 2012.
    4. David S. Bullock & Klaus Salhofer & Jukka Kola, 1999. "The Normative Analysis of Agricultural Policy: A General Framework and Review," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 512-535, September.
    5. Skully, David W., 1999. "The Economics Of Trq Administration," Working Papers 14584, International Agricultural Trade Research Consortium.
    6. Tamara Todorova & Georgi Kalchev, 2015. "The Protective Effect of an Import Quota," Foreign Trade Review, , vol. 50(2), pages 85-98, May.
    7. Ahmed, Wasim & Hussain, Safdar & Jafar, Rana Muhammad Sohail & Guang-Ju, Wang & Rabnawaz, Ambar & Saqib, Zulkaif Ahmed & JianZhou, Yang, 2016. "Impacts of Trade Liberalization on Dairy Industry in China," MPRA Paper 70385, University Library of Munich, Germany.
    8. van Berkum, Siemen & van Meijl, Hans, 2000. "The application of trade and growth theories to agriculture: a survey," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), pages 1-38.

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