Three essays in international trade : market integration, subsidization and antidumping

Abstract

This thesis contains three essays on topics in agricultural economics. The research is focused on the economic effects of different trade policies applied within the US, Canada and the European Union. Essay one evaluates the accession of Austria, Finland and Sweden to the single EU common market. The degree of integration of these three countries in agricultural trade in the EU has not previously been evaluated. Trade theory suggests that one of the outcomes resulting from a regional trade agreement is increased market integration among markets in member states. The cointegration of the commodity prices across countries is tested using time-series techniques. This method is important as it can be applied to questions relating to globalization. Essay two examines the biofuel industry in Canada and US from a trade perspective. The development of a large market for biofuels is judged to have two main benefits for North America: environmental benefits in Canada and energy security in the US. A theoretical model is developed using the option value theory to determine whether the two distinct motivating factors can lead to different levels of optimal subsidies in each country. While the development of a biofuel industry is viewed as extremely important in a number of countries, the trade laws on subsidies with respect these products lacks clarity. This research represents an important step in understanding the economics of biofuels and the situations where trade disputes can be expected to appear in the future.Dumping is the subject of the third essay where the strategies of firms in the face of an anti-dumping action are examined using game theory. The possibility of free riding in case of an anti-dumping petition is investigated in two situations: the benefits of the anti-dumping case are considered either a public good or a joint product. The second situation can be applied only for US, because of so-called Byrd Amendment. The theoretical model developed represents an important contribution to trade policy and it can be easily applied when examining the effects of other trade or domestic policies.