Is smuggling welfare-improving? Evidence from avocados in Costa Rica
Does smuggling improve economic welfare? This paper provides a theoretical model of illegal trade and determines the impact of smuggling on economic welfare. We focus on Costa Rica's recent prohibition of avocados imported from Mexico. Using unique data on trade, production, and the price of Costa R...
| Main Authors: | , |
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| Format: | Artículo preliminar |
| Language: | Inglés |
| Published: |
International Food Policy Research Institute
2018
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10568/147312 |
| _version_ | 1855533095653998592 |
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| author | Metivier, Jeanne Bouët, Antoine |
| author_browse | Bouët, Antoine Metivier, Jeanne |
| author_facet | Metivier, Jeanne Bouët, Antoine |
| author_sort | Metivier, Jeanne |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Does smuggling improve economic welfare? This paper provides a theoretical model of illegal trade and determines the impact of smuggling on economic welfare. We focus on Costa Rica's recent prohibition of avocados imported from Mexico. Using unique data on trade, production, and the price of Costa Rican and Mexican avocados, we find that the quantity of avocados smuggled into Costa Rica on an annual basis ranges from 4,668 to 10,232 metric tons, representing up to four times the quantity of locally produced avocados. Furthermore, we demonstrate that smuggling is necessarily welfare-improving compared to the ``no-smuggling situation''. Compared to the ``free-trade situation'', smuggling does not always compensate for the negative effects arising from the restrictive trade measure. In most cases, welfare is lower after the prohibition and smuggling than prior to the implementation of the prohibition. In some cases, however, smuggling results in a gain in terms of trade that offsets the harmful effects associated with the trading cost of smuggling. We find that such situations occur when the trading cost of smuggling is low, and thus when enforcement of the prohibition by public authorities is weak. |
| format | Artículo preliminar |
| id | CGSpace147312 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2018 |
| publishDateRange | 2018 |
| publishDateSort | 2018 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1473122025-11-06T07:02:12Z Is smuggling welfare-improving? Evidence from avocados in Costa Rica Metivier, Jeanne Bouët, Antoine illegal practices models smuggling avocados welfare trade Does smuggling improve economic welfare? This paper provides a theoretical model of illegal trade and determines the impact of smuggling on economic welfare. We focus on Costa Rica's recent prohibition of avocados imported from Mexico. Using unique data on trade, production, and the price of Costa Rican and Mexican avocados, we find that the quantity of avocados smuggled into Costa Rica on an annual basis ranges from 4,668 to 10,232 metric tons, representing up to four times the quantity of locally produced avocados. Furthermore, we demonstrate that smuggling is necessarily welfare-improving compared to the ``no-smuggling situation''. Compared to the ``free-trade situation'', smuggling does not always compensate for the negative effects arising from the restrictive trade measure. In most cases, welfare is lower after the prohibition and smuggling than prior to the implementation of the prohibition. In some cases, however, smuggling results in a gain in terms of trade that offsets the harmful effects associated with the trading cost of smuggling. We find that such situations occur when the trading cost of smuggling is low, and thus when enforcement of the prohibition by public authorities is weak. 2018-07-13 2024-06-21T09:13:11Z 2024-06-21T09:13:11Z Working Paper https://hdl.handle.net/10568/147312 en https://hdl.handle.net/10568/149931 https://doi.org/10.1080/09638199.2010.484503 https://doi.org/10.11130/jei.2017.32.4.937 https://doi.org/10.2499/0896295109fprev8 Open Access application/pdf International Food Policy Research Institute Metivier, Jeanne and Bouët, Antoine. 2018. Is smuggling welfare-improving? Evidence from avocados in Costa Rica. IFPRI Discussion Paper 1737. Washington, DC.: International Food Policy Research Institute (IFPRI). https://hdl.handle.net/10568/147312 |
| spellingShingle | illegal practices models smuggling avocados welfare trade Metivier, Jeanne Bouët, Antoine Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title | Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title_full | Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title_fullStr | Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title_full_unstemmed | Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title_short | Is smuggling welfare-improving? Evidence from avocados in Costa Rica |
| title_sort | is smuggling welfare improving evidence from avocados in costa rica |
| topic | illegal practices models smuggling avocados welfare trade |
| url | https://hdl.handle.net/10568/147312 |
| work_keys_str_mv | AT metivierjeanne issmugglingwelfareimprovingevidencefromavocadosincostarica AT bouetantoine issmugglingwelfareimprovingevidencefromavocadosincostarica |