The Optimal Time to Remove Quarantine Bans Under Uncertainty: The Case of Australian Bananas

13 Pages Posted: 14 Mar 2011

See all articles by Anke Leroux

Anke Leroux

affiliation not provided to SSRN

Donald MacLaren

University of Melbourne - Department of Economics

Abstract

Import restrictions on biological materials are used widely as protection against exotic invasive pests and pathogens. While a scientific risk assessment is needed to justify an import ban under the WTO SPS Agreement, economics plays little role in determining the choice of import regime. Using a real option framework, we model the uncertain and irreversible costs from lifting an import ban and derive decision rules about the optimal timing, when ex ante research and development yields positive but uncertain benefits. The insights gained are applied to Australia's current import policy for bananas.

JEL Classification: D81, F14, F18

Suggested Citation

Leroux, Anke and MacLaren, Donald, The Optimal Time to Remove Quarantine Bans Under Uncertainty: The Case of Australian Bananas. Economic Record, Vol. 87, No. 276, pp. 140-152, 2011. Available at SSRN: https://ssrn.com/abstract=1782487 or http://dx.doi.org/10.1111/j.1475-4932.2010.00690.x

Anke Leroux (Contact Author)

affiliation not provided to SSRN ( email )

Donald MacLaren

University of Melbourne - Department of Economics ( email )

Victoria 3010, 3010
Australia
(61) 3 8344-5035 (Phone)
(61) 3 8344-6899 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
313
PlumX Metrics