U.S. Trade Policy on Lamb Meat: Who Gets Fleeced?

The U.S. lamb meat industry received protection from import competition in 1999 with a tariff-rate quota. This paper analyzes proposed and adopted policies using a partial equilibrium model of lamb meat and lambs incorporating imperfect competition in the packing industry. Under a tariff policy packers can only exercise oligopsony power in the lamb market and both packers and lamb growers benefit from protection. If a quota or tariff-rate quota policy is used, packers can assert oligopoly power. Packers benefit from protection, but lamb growers may not. Under the tariff-rate quota adopted, lamb growers suffer a welfare loss.