Multiple Marginalization and Trade Liberalization: The Case of the Canadian Dairy Industry
| dc.creator | Abbassi, Abdessalem | |
| dc.creator | Larue, Bruno | |
| dc.date | 2017-04-01T19:24:34Z | |
| dc.date.accessioned | 2026-07-09T07:04:17Z | |
| dc.description | The paper analyzes the welfare impacts of trade liberalization under multiple marginalization through a spatial quilibrium model of provincial dairy markets. Canada’s dairy policy implements a supply management scheme designed to achieve higher domestic prices for farmers, taking into account the mark-up rules used by downstream firms. Our model builds on the reciprocal dumping model of Brander and Krugman (1983) as processing firms from different provinces compete à la Cournot with one another in several provinces. Simulations reveal that welfare in the Canadian dairy sector could increase by as much as $1 billion per year if aggressive tariff cuts were made while moderate liberalization plans would yield annual gains of $234.5 million. Even large producing provinces like Quebec and Ontario gain from trade liberalization. In comparison, a perfect competition model yields more modest welfare gains in the range of $15.6 million and $34.5 million. Finally, we show that the switch in the sign of the transport cost-welfare relation identified by Brander and Krugman (1983) occurs at transport costs that are too high to be policy-relevant. | |
| dc.identifier | doi:10.22004/ag.econ.148592 | |
| dc.identifier | https://ageconsearch.umn.edu/record/148592/files/Abbassi_Larue_working_paper.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/148592 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/584168 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/148592 | |
| dc.title | Multiple Marginalization and Trade Liberalization: The Case of the Canadian Dairy Industry | |
| dc.type | Text |