This paper uses a price-leadership model of the international vanilla market to study the welfare consequences of alternative pricing policies for Madagascar, the leader in the vanilla market, that also controls domestic production through a single-channel marketing system.

This paper uses a price-leadership model of the international vanilla market to study the welfare consequences of alternative pricing policies for Madagascar, the leader in the vanilla market, that also controls domestic production through a single-channel marketing system.

Using the influence-driven approach to endogenous trade-policy determination, we show how a free-trade agreement (FTA) with rules of origin can work as a device to compensate losers from trade liberalization. The FTA constructed in this paper is characterized by external tariff structures that...