Milked and Feathered: The Regressive Welfare Effects of Canada’s Supply Management Regime: Reply

Abstract

A comment by Doyon, Bergeron, and Tamini (2018) criticizes the approach and the results of a study by Cardwell, Lawley, and Xiang (2015) that quantifies the distributional effects that Canada’s supply management regime imposes on consumers. In this reply, we show that the main empirical result of Cardwell et al.—the degree of regressive distributional effects—is robust to alternative modelling choices and to alternative counterfactual price scenarios. We present new food price comparisons between Canada and the United States, showing that significant price premiums for supply-managed products persist under different exchange rates. Contrary to the results in Doyon et al., we find no evidence of systematic price premiums for non-supply-managed food products. Our new price comparisons highlight the shortcomings in the price comparisons in Doyon et al. and corroborate the results in Cardwell et al. Finally, we reject suggestions by Doyon et al. that our results are affected by research bias.