Giovanni Anania

Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute cannot be Fully Trusted?

Most food products can be classified as credence goods, and regulations exist to provide consumers with a substitute for the lacking information and trust. Rather than having no regulation in place, producers of high-quality goods are better off when a compromise is reached that leads to an imperfect regulation. Some of the producers of low-quality goods benefit by cheating under a not fully credible regulation. Even producers of low-quality goods who will never label their products as being of high quality may profit from the introduction of an imperfect regulation.

United States Export Subsidies in Wheat: Strategic Trade Policy or Expensive Beggar-Thy-Neighbor Tactic?

This paper examines the domestic and international impacts of the U.S. Export Enhancement Program (EEP) for wheat. EEP uses targeted in-kind subsidies to expand U.S. exports and was designed specifically to compete with subsidized exports from the European Community (EC). We argue EEP cannot be welfare-improving for the U.S., even considering strategic trade theory. We then model EEP as an in-kind, constrained, targeted export subsidy and determine its price, quantity, and budgetary effects. Empirical results show that no exporting country gains from EEP and that the intended loser, the EC, is only slightly harmed. We find the export subsidies generate only a small increase in U.S. wheat exports. EEP is an expensive program; based on our estimates for 1988, government cost of additional wheat exports under EEP reached

Does Arbitraging Matter? Spatial Trade Models and Discriminatory Trade Policies

469 per metric ton.

Negoziati commerciali multilaterali, accordi preferenziali e politiche agricole dell'Unione Europea

When modeling discriminatory trade policies -- such as targeted embargoes, selective quotas, targeted export or import subsidies, or preferential trading agreements -- failure to explicitly include assumptions about arbitraging behavior may yield to misleading results. Quadratic programming (QP), Non Linear Programming (NLP), and Vector Sandwich (VS) models implicitly set the rules regarding the possibility of simultaneous exporting and importing. The result is that many analysis using these models may lead to poor results because the models contain implicit limits on arbitraging which may be at variance with the actual policies and/or country behavior. The paper introduces an alternative spatial model. Its main features are that countries are allowed to switch from one side of the market to the other as prices change, and that the researcher is allowed to explicitly incorporate her own assumptions about arbitraging and/or obtain different possible solutions as a function of different policy constraints or different levels of effectiveness in enforcing such constraints. Two numerical examples, one addressing the 1980 US embargo to USSR, the other, constructed, involving preferential trading, show how the results obtained using the proposed model compare with those obtained by applying the most frequently used spatial trade models.

Domestic Farm Policy and the Gains from Trade: Reply

Multilateral trade negotiations, preferential trade agreements and European Union’s agricultural policies - The focus of the paper is on the developments so far seen and the future of the negotiations on agriculture in the Wto Doha Development Agenda round from the perspective of the European Union (EU). The first part of the paper discusses the developments that have taken place in the two parallel processes, domestic agricultural policy reform in the EU and the Wto negotiations, identifying the linkages between Cap reform decisions and developments in the EU negotiation positions. The second part of the paper discusses further changes expected in the relatively near future in the Cap and in regional trade agreements involving the EU, and the prospects for the Wto negotiations.

Domestic Farm Policy and the Gains from Trade: Comment

A general equilibrium model is used to demonstrate that, in the presence of domestic subsidies, trade can be welfare reducing relative to autarky. McDonalds comment claims that trade is always welfare improving with domestic production subsidies. He states that, when deriving a no-gains-from-trade point with production subsidies, Schmitz, Sigurdson, and Doering (SSD) (1986, 1988) and Anania and Bohman (AB) mistakenly confuse the overall welfare effects of a production subsidy with the welfare effects of free trade. First, we show that AB made the correct welfare comparison using a partial equilibrium model and then extend the results using a general equilibrium model.

Agricultural policy reform and the WTO : where are we heading?

Schmitz, Sigurdson, and Doering (SSD) argue that domestic and trade policies can lead to negative gains from trade. They derive the no-gains from trade position when the importing country restricts trade and the exporter seeks to maintain its volume of exports by subsidizing production. They extend their results to the case where the exporter imposes production subsidies, a price support, and a setaside program. SSD analyze the world wheat market and argue that current programs in wheatexporting countries may cause negative gains from trade.