Intra-National Effects of a Countervailing Duty on the United States/Canadian Hog Market

Abstract

A countervailing duty (CVD) was placed on Canadian hog imports into the United States beginning in 1985. Not surprisingly, the CVD reduced Canadian hog prices relative to U.S. hog prices, but the relative impact varied geographically. The CVD created incentives for downstream substitution of Canadian pork products, so relative hog prices were reduced more in Canadian provinces with limited processing capacity. Multivariate time series analysis, including an examination of short-run dynamics, reveals differential dynamic impacts of U.S. prices in Canadian sub-markets after