Econometric Analysis on Product Differentiation and Trade Liberalization of Beef in Japan

Abstract

In recent years, Japan has been concerned about the impact of trade liberalization on domestic production of beef. The objective of this study is to econometrically analyze the current demand structure for beef in Japan and clarify the respective degrees of product differentiation between imported beef and domestically produced beefs (Japanese beef, hybridize type beef, and dairy beef) by considering the non-stationarity of time series data; subsequently the impact of trade liberalization on domestic production of beef is also considered by studying the case of the Trans-Pacific Partnership (TPP) Agreement. The main analysis results are as follows. First, Japanese beef and hybridize type beef are differentiated from imported beef; however dairy beef competes with imported beef. Second, the TPP Agreement will not significantly affect the quantities demanded for Japanese beef and hybridize type beef but will decrease the quantity demanded for dairy beef by 8.6%. Third, the current situation is different than the one after the beef tariffication in 1991; thus, we cannot expect a mitigation effect of trade liberalization impact, such as compensating for the decrease in production of dairy beef by the increase in production of Japanese beef.