Tariffication of Tariff Rate Quotas under oligopolistic competition: the case of the EU import regimes for bananas

The paper develops a two-stage capacity constrained duopoly model, in which the mode of competition is endogenous and the constraint is exible, to investigate the impact of Tari Rate Quotas (TRQs) and their liberalization. The model predicts that the greater the gap between the price of the licences plus the in-quota tari and the out-of-quota tari , the closer the outcome of the game to the pure Cournot outcome. The tari equivalent changes according to the prevailing mode of competition under the TRQ. The model is used to address the issue of the tariffication of the non-ACP TRQ for EU banana imports. The results suggest that under the TRQ rms competed on quantity and that the tari equivalent is higher than the tariff introduced by the EU in 2006.