The simple analytics of agricultural production quotas

Haynes

2016

J. Agric. Appl. Econ.

This article updates and expands the literature on the impact of production quotas. Unlike many of the early studies, our focus is largely on the removal of production quota programs. We study cases wherein production quota programs have been eliminated and quota owners were compensated for their losses. Specifically, we examine (1) production quotas in both the absence and presence of trade, (2) production quota buyouts (three case studies), (3) sources of funding, and (4) general equilibrium considerations. A fifth section briefly discusses externalities, the interpretation of consumer surplus measures, and the nature of conducting economic analyses of addictive goods.

Section: Three Historic Production Quota Buyoutssupporting

confidence: 63%

The Not-So-Simple Economics of Production Quota Buyouts

Haynes

2016

J. Agric. Appl. Econ.

J Agricultural Economics

“…Much has been written on the effect of the EU milk quota system on efficiency and the impact on asset values (see, e.g. Harvey, 1983; Burrell, 1987; Dawson, 1991). These papers, and many others, tend to support the general theory put forward by Alston (1981) and Oskam and Speijers (1992), that the imposition of a quota generates an economic inefficiency in the sector but that the more freely traded the quota are, the smaller the inefficiency.…”

Section: Introductionmentioning

confidence: 99%

The Inefficiencies of Regionalised Milk Quota Trade

Shrestha¹,

Shalloo²,

Wallace³

2009

"This paper estimates the inefficiencies associated with the regionalisation of the milk quota trade. An optimisation model is developed to estimate the economic value of quota. Quota values are aggregated to derive quota sale and purchase curves under two scenarios: first, where quotas can be traded nationally and second, where the trade of quota is regionally restricted. Quota trade is simulated and the consequent effects on supplier structure estimated. Through the derivation of sectoral cumulative cost curves it is possible to estimate the impact of regionalising quota trade on sector efficiency. The model is solved using National Farm Survey data from Ireland and the inefficiencies of regionalised quota trade in Ireland are estimated at €27 million. The paper concludes by discussing the implications of restricted quota trade, especially in the context of eventual quota removal." Copyright (c) 2009 The Authors. Journal compilation (c) 2009 The Agricultural Economics Society.

American J Agri Economics

“…The analytics of the effects of a quota policy, for example, Dawson (1991); Fulginiti and Perrin (1993), suggest that by restricting quantities supplied, the imposition of quotas generates economic inefficiency relative to a free market policy, though quotas could improve efficiency relative to price supports, especially in the case of transferable quotas (Alston, 1981). Moreover, it has been argued that if quotas are freely tradable, more efficient farmers will buy quota from less efficient farmers, the result of this exchange being that the global quota is produced at minimum cost (Burrell, 1989b;Oskam and Speijers, 1992).…”

mentioning

confidence: 98%

Explaining Differences in Milk Quota Values: The Role of Economic Efficiency

Álvarez

Arias

Orea

2006

This article explores the relationship between milk quota values and economic efficiency in order to analyze government interventions in quota allocations among producers. For this purpose, we estimate quota values using a panel of Spanish dairy farms. Quota values are then decomposed into economic efficiency, price, and scale effects in order to assess the relative influence of these factors. We find that efficiency is important in explaining quota values but is uncorrelated with observable farm characteristics. This casts doubts on the government's ability to allocate quotas to efficient farms. Copyright 2006, Oxford University Press.