Illicit Agricultural Trade

Agricultural and wildlife trade is subject to sudden, disruptive import restrictions arising fromconcerns over sanitary and phytosanitary safety and the conservation of natural resources.These restrictions can create significant international price differences that encourage thesmuggling of goods across borders. This article presents an equilibrium model of smugglingwhere the supply and demand for smuggled goods depend on interregional price disparities inthe presence of a trade ban. In this model, smuggling is more prevalent when demand and supplyamong trade partners is more inelastic or when there are fewer total trade partners at thetime a trade ban is enacted. Applications are presented for regionalization, destruction ofgoods in government eradication programs, price support, stockpiling, and the development ofsubstitutes. Regionalization may increase smuggling under certain production and consumptionpatterns.