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Canada-U.S. Price Gap under Question

New Report Says Canadian Polices to Blame for Price Gap

By Amanda Brodhagen, Farms.com

There is a price gap between certain consumer goods, especially food, in Canada and the United States.  

According to a new report released by the Toronto-based C.D. Howe Institute, this price gap is something that Canadian consumers have become increasingly "frustrated" about.

The 15-page report entitled Sticker Shock: The Causes and Consequences of the Canada-U.S. Price Differential, suggests that consumer dissatisfaction could be easily addressed if Ottawa did two things - cut import tariffs and put an end its supply management system on dairy products, chickens and eggs.

“The easiest thing Canadian governments can do if they want to reduce the Canada-US wholesale price gap is eliminate existing tariffs and supply-management policies that are responsible for the largest price gaps,” University of Toronto economist Nicholas Li said in the report.

The following table was included in the report, highlighting the Canada-U.S. price gaps by looking at a variety of different goods. It compares three years – 2005, 2008 and 2011.
 

Table 2: Canada-US Price Gaps, by Goods Category

 

 

 

2005

2008

2011

 

 

Consumer Price Gap (%)

 

Actual Individual Consumption

0

17

28

Food and non-alcoholic beverages

23

33

57

Meat

11

47

76

Milk, cheese and eggs

35

29

77

Fish

20

-6

16

Fruit, vegetables, potatoes

9

7

29

Bread and cereals

16

32

63

Non-alcoholic beverages

25

55

46

Other food

44

41

57

Source: Author’s calculations from PPP statistics available at http://stats.oecd.org.

 

 



Mr. Li also takes aim at the federal government’s recent actions to get tough on manufactures that practice illegitimate country-specific pricing. This was one of the features in the 2014 budget.

“If the federal government is serious about reducing costs for Canadians, it should first look at some of its own policies before tasking the Competition Bureau with investigating companies charging higher prices in Canada relative to the US,” he said.

The full report can be accessed by clicking here.
 


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