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Import Quota Licenses and Market Power
Author(s) -
McCorriston Steve
Publication year - 1996
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243709
Subject(s) - market power , industrial organization , business , economics , power (physics) , phenomenon , international trade , international economics , microeconomics , commerce , monopoly , physics , quantum mechanics
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.