Illicit Agricultural Trade
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Agricultural and wildlife trade is subject to sudden, disruptive import restrictions arising from
concerns over sanitary and phytosanitary safety and the conservation of natural resources.
These restrictions can create significant international price differences that encourage the
smuggling of goods across borders. This article presents an equilibrium model of smuggling
where the supply and demand for smuggled goods depend on interregional price disparities in
the presence of a trade ban. In this model, smuggling is more prevalent when demand and supply
among trade partners is more inelastic or when there are fewer total trade partners at the
time a trade ban is enacted. Applications are presented for regionalization, destruction of
goods in government eradication programs, price support, stockpiling, and the development of
substitutes. Regionalization may increase smuggling under certain production and consumption
patterns.