REGIONAL PRICE DYNAMICS AND COUNTERVAILING DUTIES: Did the Canada-U.S.Hog/Pork Dispute Have a Permanent Impact?

Authors: LARUE, BRUNO¹; TANGUAY, LUC²

Source: International Economic Journal, Volume 13, Number 1, Number 1/Spring 1999 , pp. 81-101(21)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

Leamer (1988:53) argues that permanent trade barriers trigger stronger and more lasting responses than temporary once. We analyze the effects of U.S. countervailing duties (CVDs) imposed on Canadian hog and pork exports by testing the stability of long run arbitrage/cointegration relation between U.S., Queébec and Alberta hog prices. The CVDs induced large deviations from the long run arbitrage relations but these effects vanished with the removal of the pork CVD. Weak exogeneity tests show that the U.S. hog price did not error correct during the dispute period and confirm that CVDs contribute to insulate a large domestic market from foreign competition. [F13]

Document Type: Research article

DOI: http://dx.doi.org/10.1080/10168739900080007

Affiliations: 1: CREÉA,Université Laval 2: Agricuture and Agri-Food Canada

Publication date: 1999-03-01