GTAP Resources: Resource Display
| GTAP Resource #3246 |
|---|
|
"Trade Standards for Welfare Maximization: A Case of Indo-US Trade in Wheat and Mango" by Rastogi, Siddhartha Abstract SPS standards, the commodity specific standards to protect domestic flora and fauna, are usually kept at prohibitively high levels, thereby inducing sub-optimal outcomes as an NTB. All the studies so far have overlooked the possibility of bilateral negotiations and studied the impact of SPS standards for a single commodity and on the importing nation only. The present research addresses this gap. A negotiation based SPS regime is considered, wherein a country may settle for lower benefits or a loss on trade of one commodity due to lower standards, yet a reciprocal change for another commodity may provide higher net gains. A game-theoretic framework for strategic negotiations between two countries for two commodities is proposed with various alternate scenarios and the possible payoffs therein. For empirical justification, case of Indo-US trade in wheat and mango is chosen. At present, India does not permit import of wheat from USA due to high weed infestation, whereas mango export from India to USA was banned between 1989 and 2006 due to high pesticide levels and pests. A range of welfare payoffs to India and US under different SPS regimes is estimated. Payoffs are defined as impact on parties affected directly (consumers and producers) or indirectly (spillover effects). Partial equilibrium framework for stylized microeconomic models is used with benchmark data of 2004-06. The estimation components are then summed up over countries and commodities for comparing in game-theoretic framework. Strictly dominant Nash equilibrium is consistent with the present regime. The payoffs also conform to policy arguments by two countries negotiating to maximize own welfare. A brief sensitivity analysis is performed to point out that developed north can afford more flexibility in standards. The results show that it is more welfare augmenting for both the countries to adopt moderate level of SPS standards instead of complete ban or full liberalization. |
| Resource Details (Export Citation) | GTAP Keywords | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
- Domestic policy analysis - Agricultural policies - Economic growth - Baseline development - Asia (South-Central) - North America |
| Attachments |
|---|
|
If you have trouble accessing any of the attachments below due to disability, please contact the authors listed above.
Public Access  2010 Conference Paper (394.6 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
| Comments (0 posted) |
|---|
|
You must log in before entering comments.
No comments have been posted. |
Last Modified: 9/15/2023 2:05:45 PM
