1. The Impact on the Canadian Rapeseed Industry from Changes in Transport and Tariff Rates
- Author
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Gary G. Storey, J. G. Nagy, and William Hartley Furtan
- Subjects
Economics and Econometrics ,Econometric model ,Rapeseed ,food.ingredient ,food ,Economics ,Tariff ,Agricultural and Biological Sciences (miscellaneous) ,Comparative advantage ,Agricultural economics ,Japanese market ,Soybean oil - Abstract
The comment by Griffith and Meilke (GM) on the paper by Furtan, Nagy, and Storey (FNS) relates to (a) the lack of an endogenous soybean sector and (b) the single period nature of the FNS model. The GM model is a large econometric model of both the rapeseed and soybean sectors in six regions. The FNS model is a spatial-equilibrium quadratic-programming model of four regions and three commodities: rapeseed, rapeseed oil, and rapeseed meal. The conclusions drawn from the two models are somewhat different and are not surprisingly so as the models used are based on different assumptions. It is the exogenous nature of the soybean, soybean oil and meal sector that makes the GM model different from the FNS model. This however, is not likely the reason for the different conclusions found between GM and FNS on the removal of the Japanese tariff on imported rapeseed oil. There are two key assumptions that are different in the GM and FNS model. First, GM allow for the EC to export rapeseed into the Japanese market, whereas FNS considered the EC as an import region only. Second, the conversion of rapeseed into rapeseed oil and meal is a fixed parameter in the FNS model, while it is stochastic in the GM model. It is these assumptions that explain the different conclusions found. The FNS model uses fixed input-output coefficients for converting rapeseed into oil and meal. The Canadian plants are newer and supposedly more efficient than the Japanese plants, which gives the Canadians a comparative advantage. Thus, when all market restrictions are removed, the crushing of rapeseed moves to Canada because of the comparative advantage. The GM model uses a somewhat different procedure to estimate the supply of oil and meal, and thus they get different answers-given in the first period after the tariff is removed. The GM model is a potential improvement over the FNS model in that it endogenizes the EC market. GM found that after the Japanese rapeseed oil tariff was removed, imports of rape oil into Japan increased, not from Canada as found by FNS, but from the EC. This GM claim is the major difference in the conclusions of the two studies, and they attribute this to the fact that the GM model
- Published
- 1979
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