Steve McCorriston

Exchange Rate Uncertainty and Agricultural Trade

Using a sample of bilateral trade flows across ten developed countries between 1974 and 1995, this article explores the effect of exchange rate uncertainty on the growth of agricultural trade as compared to other sectors. Based on a gravity model that controls for other factors likely to determine bilateral trade, the results show that real exchange rate uncertainty has had a significant negative effect on agricultural trade over this period. Moreover, the negative impact of uncertainty on agricultural trade has been more significant compared to other sectors.

Corruption Around the World: Evidence from a Structural Model

The causes and consequences of corruption have attracted much attention in recent years by both academics and policy makers. Central in the discussion on the impact of corruption are perception-based indices. While informative, these indices are ordinal in nature and hence provide no indication of how much economic loss is attributed to corruption. Arguably, this shortcoming is rooted in the lack of a structural model. This is the issue addressed in this paper. By treating corruption as a latent variable that is directly related to its underlying causes, a cardinal index of corruption is derived for approximately 100 countries. This allows us to compute a measure of the losses due to corruption as a percentage of GDP per capita.

Intra-Industry Trade and Specialization in Processed Agricultural Products: The Case of the US and the EC

The literature on intra-industry trade has generally focused on manufactured goods. Given the growth of trade in processed agricultural products, this paper examines trade in a sample of high-value products for the US and the EC using indices of intra-industry trade and intra-industry specialization. The results indicate that for total trade in 1986, the EC exhibited more intra-industry trade across the sample than the US, although much of this was due to trade among EC countries. Further, over the period 1977–1986, the EC indicated a greater tendency towards intra-industry specialization in its geographical pattern of trade than the US.

Deregulation as (Welfare Reducing) Trade Reform: the Case of the Australian Wheat Board

State trading enterprises are distinguishable from private, commercial firms by the nature of their exclusive rights and objectives. Deregulation of the Australian Wheat Board is used to illustrate the effects of these rights and objectives on trade and welfare. Theoretical models are specified and the effects measured through calibrated, partial equilibrium models. It was found that the successive deregulations of the Australian Wheat Board caused it to switch from being equivalent to an export subsidy to, today, being equivalent to an export tax. At the same time, deregulation has not necessarily been welfare enhancing. Copyright 2007, Oxford University Press.

Government Intervention in Imperfectly Competitive Agricultural Input Markets

The frequent demands for protection by the fertilizer industry in many developed countries may have important implications for the agricultural sector. This paper provides a theoretical justification for government intervention in the fertilizer market in the form of an import tariff against foreign competitors. However, a superior policy would be for the government to counter the competitive distortion that exists in the market. An even better outcome is attained by using both policies simultaneously. Moreover, since the fertilizer industry undergoes continuous structural change, the extent to which optimal policies should vary is also investigated.

Foreign direct investment in the UK: evidence from a disaggregated panel of the UK food sector

Most empirical studies of foreign direct investment (FDI) typically use either a cross-sectional (capturing ownership-specific and industry determinants) or time-series (capturing the determinants of FDI over time) approach. Panel data techniques, however, have the advantage of combining both aspects of the data. Using disaggregated panel data for the UK food sector – a leading recipient of FDI in the UK – the results in this paper highlight the predominance of ownership-specific and industry characteristics in determining the presence of foreign-owned firms in this sector while macro-economic factors have a more marginal effect.

Buyer Power in U.K. Food Retailing: A 'First-Pass' Test

The potential existence of buyer power in U.K. food retailing has attracted the scrutiny of the U.K.s anti-trust authorities, culminating in the second of two comprehensive regulatory inquiries in recent years. Such inquiries are authoritative but correspondingly time-consuming and costly. Moreover, detection of buyer power has been dogged by the paucity of reliable evidence of its existence. In this paper, we present a simple theoretical model of oligopsony which delivers quasi-reduced form retailer-producer pricing equations with which the null of perfect competition can be tested using readily available market data. Using a cointegrated vector autoregression, we find empirical results that show the null of perfect competition can be rejected in seven of the nine food products investigated. Though not conclusive on the existence of buyer power, the proposed test offers a means via which the behaviour of the retail-producer price spread is consistent with it. At the very least, it can corroborate the concerns of the anti-trust authorities as to whether buyer power is potentially one source of concern.

Import Quota Licenses and Market Power

Analyses of import quota regimes typically ignore institutional features under which the quota licenses are administered. However, distributing the bulk of import licenses to a small number of firms can create oligopsony power and hence affect the level of quota rent and the potential success of auctioning licenses. In this paper I test formally for this phenomenon in the U.S. dairy import quota regime. Results suggest that the administration of import licenses for cheese creates oligopsony power for U.S. cheese importing firms. Copyright 1996, Oxford University Press.

Selling Import Quota Licenses: The U.S. Cheese Case

Recent discussions on U.S. trade policies suggest that import quotas should be auctioned to ensure the U.S. Treasury acquires the quota rent. However, studies estimating the potential benefits have ignored important details of import quota regimes and have assumed perfect competition and no exporter retaliation. We explore these three issues with an application to the U.S. cheese import quota regime. We show that when features of the U.S. dairy quota regime and structure of the cheese processing sector are accounted for, likely quota rents and potential welfare consequences of selling import licenses change significantly. While quota license sales may raise Treasury receipts, they may also cause a net welfare loss.

Vertical restraints and competition policy in the US and UK food marketing systems

A review of the vertical restraints literature shows that while it is rich in analysis of such restraints, theory is ambiguous about their private and social effects, and, hence, their regulation. Analysis presented in this article suggests that this ambiguity in the literature appears to be mirrored in the decisions on vertical restraints of the US courts and the UK competition authorities with regard to their respective food systems. In addition, there is an interesting contrast between the type of vertical relationships investigated by the US and the UK authorities, the latter covering a broader range of restraints.