The Theory of Tariff Rate Quotas: An Application to the U.S. Sugar program using MONASH-USA

MONASH-USA (also known as USAGE-ITC) is a detailed dynamic general equilibrium model of the U.S. developed by the Centre of Policy Studies in collaboration with the U.S. International Trade Commission. This paper reports on the theoretical developments completed for a project intended to (a) add detail to the industry and commodity classification of the relevant sectors and (b) create a detailed modelling structure for the U.S. trade and industry-support policies that affect these sectors. A secondary theme of the research is the development and application of methods for modelling complementarity relationships in a large-scale general equilibrium framework. Data issues and simulation results are discussed in a second paper.