Abstract
Purpose This study quantifies the non-tariff measures on the Korean beef market using a cointegration test and simulation model. Design/Methodology/Approach This paper introduces a hybrid approach which combines cointegration analysis and a simulation model. We assume that there are sanitary and phytosanitary measures in the Korean beef market after banning U.S. beef in 2004. Hence, we use cointegration test results using domestic and U.S. beef prices to calibrate simulation model for the Korean beef market. The approach follows the steps of (1) cointegration tests, (2) a partial equilibrium model, and (3) calculating an Ad-valorem equivalent SPS measure. Findings The results show that the Ad-valorem equivalent SPS measure is 77%. This size is larger than the 55% derived by the traditional price gap approach. Research Implications This study provides a hybrid model to quantify an SPS measure. We take the Korean beef market as there could be non-tariff barriers after the Bovine Spongiform Encephalopathy event in 2004. Our study not only quantifies the NTM in the Korean beef market but also introduces a hybrid approach for quantifying the NTM. Hence, our approach can apply to other studies related to NTM.
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