In the first quarter of 2013, the world price for raw sugar, 23 per pound, was about
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In the first quarter of 2013, the world price for raw sugar, 23¢ per pound, was about 79% of the domestic price, 29¢ per pound, because of quotas and tariffs on sugar imports. Consequently, U.S.-made corn sweeteners can be profitably sold domestically. A decade ago, the U.S. Commerce Department estimated that the quotas and price support reduce U.S. welfare by about $3 billion a year, so each dollar of Archer Daniels Midland’s profit from selling U.S. sugar costs Americans about $10. Model the effects of a quota on sugar in both the sugar and corn sweetener markets.
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