Abstract

This study analyzes the impact of the introduction of Tariff Rate Quota (TRQ) on the onion and garlic markets in Korea using an Equilibrium Displacement Model (EDM). For the more specific discussion, three scenarios was set up as follows: (1) Introduction of Onion TRQ, (2) Introduction of Garlic TRQ, and (3) Introduction of Onion and Garlic TRQ. As the result of analyses, introducing TRQ causes the increase of import, and then decreases of domestic price and production which result in the decrease of producers’ income. The scenario 2 had a greater impact on the market of substitutes than scenario 1. Scenario 3 had a greater change on supply, demand and price than scenarios 1 and 2. These results present that the introduction of Garlic TRQ should be concerned more carefully than the Onion TRQ. Moreover, while the simultaneous introduction of TRQ in agricultural products with a production substitution relationship can stabilize prices, it increases the volatility of supply and demand. Also, the market size of the onion was reduced than garlic. This study is the practical research using the TRQ plan announced by the government and applied the EDM which is easy to change and expand the target market. Discussions on the results of this study can provide political guidelines and implications for establishing the TRQ plan.

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