Interprovincial versus International Free Trade: The Brewing Industry.

This paper examines the potential welfare changes resulting from the removal of the interprovincial and international trade barriers currently in place in the brewing industry. Using a cost function estimated on plant-level data, the authors find that the potential gains from rationalizing production, following liberalizing trade between Canada's provinces, outweigh the further benefits that would result from free trade in the international sphere, given interprovincial free trade. The rationalization of the industry in terms of a reduced number of plants could lead to producer gains (on a recurring basis) equal to as much as 15 percent of expenditures at markets prices.