The 1988 Canada - United States Free Trade Agreement and GATT decision radically altered the trading regime between the two countries. Historically wellinsulated from a competitive environment, there was concern that the British Columbia wine industry would not be able to compete under the new trading rules outlined within the Free Trade Agreement and resulting from the GATT decision that once imported, all products were to be afforded national treatment. This study was undertaken to determine whether or not the industry is better off under the Free Trade Agreement with respect to profits and the ability to compete head on with imports. A benchmark situation covering producer organization/market structure, prices, production and profitability portrays an industry prior to the Free Trade Agreement that is profitable, however, the profitability appears to be based on the fact that the B.C. government was protecting the industry against foreign wine producers. Section 4.0 of the study outlines the trade related factors; policy and procedural changes. Details of industry policy, the FTA, GATT ruling, and interprovincial barriers are discussed with a graphical analysis of the impact of B.C.'s domestic policies on the international market. Section 5.0 studies the industry changes as a result of Section 4.0. Changes in pricing, production (domestic and imported), industry sales and revenue, profitability and marketing strategies lead to the conclusions presented in Section 6.0. The conclusions of the analysis support the hypothesis that the B.C. wine industry is at least as profitable as it was prior to the policy changes and its growth suggests that the most profitable segments of the industry are the premium estate and farm winery segments.

The 1988 Canada - United States Free Trade Agreement and GATT decision radically altered the trading regime between the two countries. Historically wellinsulated from a competitive environment, there was concern that the British Columbia wine industry would not be able to compete under the new trading rules outlined within the Free Trade Agreement and resulting from the GATT decision that once imported, all products were to be afforded national treatment. This study was undertaken to determine whether or not the industry is better off under the Free Trade Agreement with respect to profits and the ability to compete head on with imports. A benchmark situation covering producer organization/market structure, prices, production and profitability portrays an industry prior to the Free Trade Agreement that is profitable, however, the profitability appears to be based on the fact that the B.C. government was protecting the industry against foreign wine producers. Section 4.0 of the study outlines the trade related factors; policy and procedural changes. Details of industry policy, the FTA, GATT ruling, and interprovincial barriers are discussed with a graphical analysis of the impact of B.C.'s domestic policies on the international market. Section 5.0 studies the industry changes as a result of Section 4.0. Changes in pricing, production (domestic and imported), industry sales and revenue, profitability and marketing strategies lead to the conclusions presented in Section 6.0. The conclusions of the analysis support the hypothesis that the B.C. wine industry is at least as profitable as it was prior to the policy changes and its growth suggests that the most profitable segments of the industry are the premium estate and farm winery segments. / Land and Food Systems, Faculty of / Graduate

Until the introduction of the trade liberalization initiatives of 1989, the wine producers of British Columbia appeared to have operated in an environment that fostered less than competitive behaviour. Two factors in particular may have been responsible for creating such an environment: (1) the structure of the industry was inherently oligopolistic; and (2) protection from foreign competition was afforded by the British Columbia government in the form of a wine policy that effectively created non-tariff trade barriers against foreign wine producers. This study econometrically tests the hypothesis that British Columbia wine producers behaved non-competitively during the years 1957 to 1986. A model of the British Columbia wine industry is developed and used to estimate the degree of non-competitive pricing behaviour in the industry, and tests are undertaken to determine whether the estimate of behaviour is consistent with competitive or with other well known behavioral specifications. the main structural components of the industry are described in a model of oligopolistic behaviour using a linear system of equations, in which both demand and pricing equations appear. The parameters which affect each of these equations are estimated using the appropriate estimation technique. The econometric results, and the subsequent statistical tests, support the hypothesis that the domestic wine industry in British Columbia operated in a non-competitive manner between 1957 and 1986. Specifically, the hypothesis of competitive behaviour is statistically rejected, whereas, the hypotheses of Cournot and collusive-type behaviour could not be rejected. These results suggest that British Columbia consumers may have been sacrificing to firms at least a portion of the surplus they would have obtained in a perfectly competitive industry. In addition, it appears that the wine policy of the provincial government helped create a non-competitive industry that will likely have difficulty competing in today's global market for wine.

Until the introduction of the trade liberalization initiatives of 1989, the wine producers of British Columbia appeared to have operated in an environment that fostered less than competitive behaviour. Two factors in particular may have been responsible for creating such an environment: (1) the structure of the industry was inherently oligopolistic; and (2) protection from foreign competition was afforded by the British Columbia government in the form of a wine policy that effectively created non-tariff trade barriers against foreign wine producers. This study econometrically tests the hypothesis that British Columbia wine producers behaved non-competitively during the years 1957 to 1986. A model of the British Columbia wine industry is developed and used to estimate the degree of non-competitive pricing behaviour in the industry, and tests are undertaken to determine whether the estimate of behaviour is consistent with competitive or with other well known behavioral specifications. the main structural components of the industry are described in a model of oligopolistic behaviour using a linear system of equations, in which both demand and pricing equations appear. The parameters which affect each of these equations are estimated using the appropriate estimation technique. The econometric results, and the subsequent statistical tests, support the hypothesis that the domestic wine industry in British Columbia operated in a non-competitive manner between 1957 and 1986. Specifically, the hypothesis of competitive behaviour is statistically rejected, whereas, the hypotheses of Cournot and collusive-type behaviour could not be rejected. These results suggest that British Columbia consumers may have been sacrificing to firms at least a portion of the surplus they would have obtained in a perfectly competitive industry. In addition, it appears that the wine policy of the provincial government helped create a non-competitive industry that will likely have difficulty competing in today's global market for wine. / Land and Food Systems, Faculty of / Graduate