Devadoss, Stephen

September, 2022

Determinants of Global Agricultural Trade

By: Devadoss, Stephen ; Ugwuanyi, Blessing ; Ridley. William
While comparative advantage factors expand agricultural trade, trade and domestic policies and gravity factors can either promote or hinder commodity trade. We use a theoretical multicountry trade model to analyze how various factors impact agricultural trade. Following previous literature, we model cross-country productivity differences using a probabilistic distribution. We then empirically implement the theoretical model to quantify the effects of various determinants of agricultural trade. Production-inhibiting policies and tariffs hinder bilateral trade, while domestic institutional quality, support programs, and land endowments expand bilateral trade.
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September, 2022

An Empirical Evaluation of Tobacco Addiction in the United States

By: Hovhannisyan, Vardges ; Bastian, Chris ; Devadoss, Stephen
This study adopts a novel approach to assessing addiction to cigarettes, small and large cigars, e-cigarettes, smokeless tobacco, and loose smoking tobacco by decomposing tobacco demand into supernumerary and precommitted quantities. Supernumerary tobacco consumption represents a demand component that varies with prices and smoker income, while precommitted consumption is immune to changes in economic circumstances and thus may be reflective of addiction. By empirically estimating the supernumerary and precommitted demand components, we shed light on the severity of tobacco addiction and smoker price and income responsiveness in the United States, which may prove vital in refining various tobacco control policies.
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January, 2022

Analysis of Chinese Tariff Impacts on the Sorghum Market under Varying Market Structures

By: Sabala, Ethan ; Devadoss, Stephen
Using a theoretical and empirical spatial equilibrium model, we examine the effect of the Chinese 25% tariff on the world sorghum market under various market structures. The effects of the tariff are less pronounced under bilateral monopoly than under perfect competition. Specifically, the reallocations of trade caused by the tariff are lessened as the United States uses its market power to mitigate adverse effects. This reduces the tariff's impacts on prices, production, consumption, and welfare for most countries. However, the calibration revealed that the United States and China do not exert significant market power on the world sorghum market and that international sorghum trade is more accurately represented by perfect competition.
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May, 2021

Impacts of COVID-19-Induced Labor and Income Shocks on the Broiler Supply Chain

By: Luckstead, Jeff ; Devadoss, Stephen
We use a broiler supply-chain model to examine the impacts of COVID-19-induced labor shortages and income reduction throughout the sector. Results show that the labor shock has negative effects on production throughout the supply chain, causing meat shortages and the average retail price to rise by 11:11%. The income shock lowers both quantities and prices in the supply chain. The combined production effects of both shocks are generally more pronounced, as they reinforce each other. However, retail prices move in opposite directions, with labor shock increasing prices and income shock reducing prices, leading to a 5:44% net increase in the average retail price.
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January, 2020

Implications of U.S. Immigration Policies for North American Economies

By: Devadoss, Stephen; Zhao, Xin; Luckstead, Jeff
We develop a four-sector (labor-intensive agriculture, capital-intensive agriculture, service & construction, and manufacturing) general-equilibrium model of North American countries to analyze the effects of tighter U.S. immigration policies. Results show that these policies erode the comparative advantage of U.S. labor-intensive agriculture, causing U.S. production and exports to fall and other countries to expand their exports to the United States. In Mexico, low-skilled labor demand in labor-intensive agriculture increases as production rises. The effectiveness of U.S. tighter immigration policies depends on the substitutability between U.S. domestic and undocumented workers. Immigration policies exacerbate the wedge between Mexican low-skilled wage rate and the undocumented wage rate, intensifying the underlying cause for unauthorized entry.
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May, 2019

Trade and Investment Liberalization in the Processed Food Market under the Comprehensive Economic and Trade Agreement

By: Luckstead, Jeff; Devadoss, Stephen
We investigate the impacts of Comprehensive Economic and Trade Agreement (CETA) liberalizations of trade and investment barriers on processed food markets. Using a four-region monopolistic competition model with heterogeneous food-processing firms that incorporates domestically operating, exporting, and multinational enterprise (MNE) firms, we quantify the effects of tariff elimination, fixed trade cost reduction, and foreign direct investment (FDI) cost reduction under CETA on prices, domestic sales, bilateral trade flows, affiliate sales, productivity, number of firms, and aggregate output. Our results highlight that trade liberalization promotes bilateral exports but reduces foreign affiliate sales, and, in contrast, lower FDI costs expand MNE affiliate sales but curtail bilateral exports.
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May, 2019

Impacts of Chinese Tariff on World Soybean Markets

By: Sabala, Ethan; Devadoss, Stephen
China targeted U.S. soybeans, among other commodities, for its recent retaliatory tariff chiefly because of the sheer volume of its imports from the United States. We develop a theoretical and empirical spatial equilibrium trade model to analyze the effects of the 25% Chinese soybean tariff on the United States, China, and nine other major soybean trading regions. Both the United States and China incur welfare losses as a result of the tariff, but Brazil experiences a large net gain. The United States mitigates some of its losses by reallocating trade to other importers, but at a cost to smaller exporters such as Canada.
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September, 2016

The Impact of Agricultural Subsidies on the Corn Market with Farm Heterogeneity and Endogenous Entry and Exit

By: Devadoss, Stephen; Gibson, Mark J.; Luckstead, Jeff
We develop a model with farm-level heterogeneity in productivity and endogenous entry and exit decisions to analyze the effect of price supports and direct payments on the U.S. corn market. The analytical results show that, contrary to the existing literature, removal of direct payments augments productivity while removal of price supports does not impact productivity, and direct payments can lead to larger production distortions than price supports under certain conditions. The simulation results corroborate the theoretical findings in that if both policies are equal in magnitude, then direct payments result in larger price, output, and welfare distortions than price supports.
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May, 2016

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

By: Dhamodharan, Mahalingam; Devadoss, Stephen; Luckstead, Jeff
Orange juice processors in Florida face stiff competition from São Paulo processors. The United States imposes a specific import tariff to protect domestic processors. São 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 São Paulo; prices; quantities; and welfare in the United States, Brazil, and the European Union. Free trade and an increase in São Paulo productivity benefit U.S. and EU consumers and São Paulo processors. In contrast, U.S. tariff reduction adversely impacts Florida processors.
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January, 2015

Imperfect Competition between Florida and Sao Paulo (Brazil) Orange Juice Producers in the U.S. and European Markets

By: Luckstead, Jeff; Devadoss, Stephen; Mittelhammer, Ron
We develop a strategic trade model to analyze the oligopolistic competition between Florida and São Paulo processors in the U.S. orange juice market and São Paulo processors in the European orange juice market. We obtain analytical results of the effects of changes in trade liberalization. A structural econometric model is derived from the theoretical model, and the new empirical industrial organization literature is used to estimate the market power of Florida and São Paulo producers. We simulate the effects of U.S. and European tariff reductions on prices, quantities, and trade volume
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December, 2010

Is the U.S. Import Tariff on Brazilian Ethanol Justifiable?

By: Devadoss, Stephen; Kuffel, Martin
The United States has used tax credits and mandates to promote ethanol production. To offset the tax credits received by imported ethanol, the United States instituted an import tariff. This study provides insights about the quantitative nature of a U.S. trade policy that would establish a free-market price for ethanol, given the U.S. ethanol mandate and tax credit. The theoretical results from a horizontally related ethanol-gasoline partial equilibrium model show that the United States should provide an import subsidy rather than impose a tariff. The empirical results quantify that this import subsidy is 9 cents, instead of a 57 cent import tariff, per gallon of ethanol.
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August, 2006

A General Equilibrium Analysis of Foreign and Domestic Demand Shocks Arising from Mad Cow Disease in the United States

By: Devadoss, Stephen; Holland, David W.; Stodick, Leroy; Ghosh, Joydeep
The discovery of the first case of mad cow disease in the United States in 2003 reverberated across the beef and cattle industry. This study employs a general equilibrium model to analyze the potential economic effects of mad cow disease on the beef, cattle, and other meat industries under three scenarios, ranging form most favorable to most pessimistic. The scenario with 90% foreign demand decline and 10% domestic demand reduction generates results consistent with the actual outcomes after the mad cow disease outbreak. Only if domestic demand declines significantly will the economic hardship in the U.S. beef and cattle industry be very large.
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December, 1995

TRADE CREATION AND DIVERSION EFFECTS OF THE NORTH AMERICAN FREE TRADE AGREEMENT OF U.S. SUGAR IMPORTS FROM MEXICO

By: Devadoss, Stephen; Kropf, Jurgen; Wahl, Thomas I.
A world sugar model consisting of 21 countries was developed to determine the effects of NAFTA of U.S. and Mexican sugar markets and to quantify the trade creation and diversion effects on U.S. imports from Mexico. Mexican sugar production increases under NAFTA, causing Mexico to become a net exporter. NAFTA induces sugar imports from Mexico to displace U.S. production, to meet demand expansion, and also to divert U.S. imports from other foreign suppliers to Mexico. Effects of NAFTA on the U.S. sugar market are small because of the side agreements which limit Mexican exports and which include corn sweetener consumption when computing Mexico's production surplus.
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