Imperfect Competition, Trade Policies, and Technological Changes in the Orange Juice Market

Orange juice processors in Florida face stiff competition from Sao Paulo processors. The United States imposes a specific import tariff to protect domestic processors. sao Paulo processors also export to the European Union, which imposes an ad valorem tariff on orange juice. Under oligopolistic competition with endogenous firm entry and exit, this paper analyzes how the changes in tariff policy and productivity impact the market structure in Florida and sao Paulo; prices; quantities; and welfare in the United States, Brazil, and the European Union. Free trade and an increase in Sao Paulo productivity benefit U.S. and EU consumers and Sao Paulo processors. In contrast, U.S. tariff reduction adversely impacts Florida processors.