Abstract
As a signatory of the World Trade Organisation Agreement, Australia has a responsibility to ensure that the behaviour of its internal markets for food and food-related products abide by the same rules and regulations as international trade. There is therefore an increasing need to demonstrate the validity of any measure which restricts competition between production centres to ensure against an appeal and/or retaliatory actions by trading counterparts. This paper explores two economic evaluation techniques which can be used to examine the welfare implications of quarantine policies imposed on interstate trade, and discusses practical applications of each with the aid of two case studies. One approach relies on an aggregated, industry-wide perspective, and is shown to be most appropriate when the cost characteristics of an industry’s component growing regions are similar. The other focuses on spatial elements of a domestic industry, which is best used when there are significant cost differences between component producing regions. In addition to examining the accuracy of these techniques in policy analysis, the size characteristics of the industries they can be applied to are also analysed. Using the examples of the mango and tomato industries in Western Australia, both of which enjoy quarantine protection from interstate growers, it is shown that the consumer welfare implications of competition restrictions outweigh producer welfare implications in larger industries, and vice versa.