The impact of tariff-rate quotas and imperfect competition on market access.

Abstract

The paper focuses on the question of how imperfect competition affects agricultural trade. Given that the buyers’ concentration in livestock and meat-markets is relatively high, imperfect competition is assumed in the analysis. It is shown theoretically that imperfect competition causes market distortions and additional margins which burden consumers and producers. Therefore, tariff-rate quotas (TRQs) should be eliminated in favor of pure tariff systems. In all those cases where TRQs are considered politically “indispensable”, measures that ensure the allocation by auctions should be employed. The experience from auctioning TRQs for white wine and meat-products in Switzerland shows that the danger of collusion among bidding firms can be reduced if the access to the auction procedure is open to all interested firms. There is a great need for reform towards competitive auctions in order to eliminate quota administration methods that are anti-competitive and that cause rent-seeking. Further research should concentrate on the systematic analysis of auction results in order to improve the auction design for an efficient allocation of TRQs. Corresponding address: Robert Joerin Department of Agricultural Economics Swiss Federal Institute of Technology Sonneggstrasse 33, CH-8092 Zurich Email: robert.joerin@iaw.agrl.ethz.ch Acknowledgments: The author is grateful to A. Abdulai, M. Koenig and R. Herrmann for helpful comments on an earlier draft of paper. The usual disclaimer applies.