Welfare Effects of Trade Policy Instruments: evidence from the nineteenth century British sugar market (WETPOL)

The Welfare Effects of Trade Policy Instruments (WETPOL) project provides the first comparative study of the long-run effects of a set of trade policy measures on the welfare of consumers and producers of a single commodity in a single market over time.

Despite the importance of the welfare effects of trade policy in the modern context, existing research has confined itself to examining the short-run welfare effects of individual trade policy instruments, principally due to the scarcity of long-run price and trade data for commodities subjected to multiple trade policy interventions of differing natures.

WETPOL obviates issues of data scarcity and confounding that limit studies using modern data by exploiting an historical case study: the nineteenth century British sugar market.

The British case provides an ideal historical laboratory for studying the welfare effects of trade policy instruments, as the sugar market was the focal point of a series of demarcated trade policy interventions, including the reduction of import tariffs in 1846, the large-scale dumping of subsidised foreign beet sugar during the 1880s, and the implementation of a multilateral treaty prohibiting the use of export subsidies in 1902.

To this end, the project constructs a novel database of monthly observations of prices and imports of cane and beet sugar for the British market spanning the period 1827 to 1913 and estimates welfare effects for three policy interventions.