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An Economic Model Of U.S. Imports Of Butter And Milk Fat Products

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  • Bailey, Kenneth W.
  • Wu, Zhen

Abstract

This study developed a model to explain monthly imports of butter and butter substitutes. The U.S. imports butter and other high milk fat products that can substitute for a strict definition of butter. These products include dairy spreads, butter substitutes, anhydrous milk fat, and food preparations. The U.S. imports these high milk fat products under a tariff-rate quota system (TRQ) implemented by the World Trade Organization (WTO). This study quantified all the milk fat contained in U.S. butter and butter substitute imports. A conceptual model was developed to explain imports of these products under a TRQ system. And an econometric model was estimated to analyze the economic factors that drive over-quota imports. The model found that the wedge between U.S. and world butter prices explains much of the incentive to import overquota butter and butter substitutes.

Suggested Citation

  • Bailey, Kenneth W. & Wu, Zhen, 2005. "An Economic Model Of U.S. Imports Of Butter And Milk Fat Products," Staff Paper Series 18846, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    • Handle: RePEc:ags:psusps:18846
    DOI: 10.22004/ag.econ.18846
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    References listed on IDEAS

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    1. Andrew M. Novakovic & Robert L. Thompson, 1977. "The Impact of Imports of Manufactured Milk Products on the U.S. Dairy Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(3), pages 507-519.
    2. Bailey, Kenneth W., 2002. "Implications of Dairy Imports: The Case of Milk Protein Concentrates," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(2), pages 248-259, October.
    3. Larry Salathe & William D. Dobson & Gustof A. Peterson, 1977. "Analysis of the Impact of Alternative U.S. Dairy Import Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(3), pages 496-506.
    4. Bailey, Kenneth W., 2002. "Implications of Dairy Imports: The Case of Milk Protein Concentrates," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(2), pages 1-12, October.
    5. Novakovic, Andrew M. & Thompson, Robert L., 1977. "The Impact Of Imports Of Manufactured Milk Products On The U.S. Dairy Industry," 1977 AAEA-WAEA Joint Meeting, July 31-August 3, San Diego, California 283628, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Gehrke, Brad C. & Babula, Ronald A. & Coleman, Jonathan R., 2004. "An Analysis of the Impact of European Union and United States Dairy Policies on EU-U.S. Trade in Milk Protein Concentrate," Working Paper ID Series 15875, United States International Trade Commission, Office of Industries.
    Full references (including those not matched with items on IDEAS)

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    International Relations/Trade;

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