Suchergebnisse

A comment by Doyon, Bergeron, and Tamini (2018) criticizes the approach and the results of a study by Cardwell, Lawley, and Xiang (2015) that quantifies the distributional effects that Canada's supply management regime imposes on consumers. In this reply, we show that the main empirical result of Cardwell et al.—the degree of regressive distributional effects—is robust to alternative modelling choices and to alternative counterfactual price scenarios. We present new food price comparisons between Canada and the United States, showing that significant price premiums for supply-managed products persist under different exchange rates. Contrary to the results in Doyon et al., we find no evidence of systematic price premiums for non-supply-managed food products. Our new price comparisons highlight the shortcomings in the price comparisons in Doyon et al. and corroborate the results in Cardwell et al. Finally, we reject suggestions by Doyon et al. that our results are affected by research bias.

The production and trade of dairy and poultry products in Canada are controlled by a system of supply management (SM). Output is regulated with production quotas, and imports are restricted through a system of tariff-rate quotas. Many of Canada's trading partners are seeking better access to Canadian dairy and poultry markets in negotiations over proposed preferential trade agreements. These pressures have renewed debate about the future of SM in Canada. We investigate one criticism of SM: that high prices for dairy and poultry products impose regressive distributional effects on Canadian consumers. We apply the Exact Affine Stone Index demand model to data from the Canadian Food Expenditure Survey to estimate consumer responses to price changes for dairy and poultry products. Parameters from the demand model are used to generate welfare comparisons between the current SM regime and a counterfactual liberalized market. Canada's SM policies are highly regressive, imposing a burden of approximately 2.3 percent ($339) of income per year on the poorest households, compared to 0.5 percent ($554) for the richest households. The burden is larger for households with children.