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Efficiency Loss Due to Distortions in Dutch Milk Quota Trade

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  • Boots, Maroeska
  • Oude Lansink, Alfons
  • Peerlings, Jack
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    Abstract

    This study analyses the welfare costs of trade distortions in the exchange of milk quota by simulating potential quota trade for 1992/93 subject to various trade restrictions. Efficient quota allocation, in an unrestricted market, comes about when the price of quota is 0.39 guilders per kilogram in 1992/93 prices. A combination of a floor of 10 thousand kilograms on quota supply and a ceiling of 75 thousand kilograms on quota demand results in an efficiency loss of 2.29 per cent of total profit without trade distortions. Incorporating a margin of 2 per cent between the demand and supply price has a minor effect, the total efficiency loss being 0.13 per cent. Another 0.13 per cent accrues to intermediates in quota trade as transfer costs. Copyright 1997 by Oxford University Press.

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    Bibliographic Info

    Article provided by Foundation for the European Review of Agricultural Economics in its journal European Review of Agricultural Economics.

    Volume (Year): 24 (1997)
    Issue (Month): 1 ()
    Pages: 31-46

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    Handle: RePEc:oup:erevae:v:24:y:1997:i:1:p:31-46

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    Cited by:
    1. Bogetoft, Peter & Jensen, Peter Max Friis & Nielsen, Kurt & Olesen, Henrik Ballebye & Olsen, Rene H., 2002. "Single Bid Restriction in Milk Quota Exchanges - Comparing the Danish and the Ontario Exchanges," Unit of Economics Working papers, Royal Veterinary and Agricultural University, Food and Resource Economic Institute 24181, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
    2. Ciaian, Pavel & Kancs, d'Artis & Swinnen, Johan F.M., 2012. "Income Distributional Effects of Decoupled Payments: Single Payment Scheme in the European Union," Working Papers, Factor Markets, Centre for European Policy Studies 129428, Factor Markets, Centre for European Policy Studies.
    3. Chernoff, A. W., 2013. "Between a Cap and a Higher Price: The Dairy Quota Trilemma," Working Papers, Canadian Agricultural Trade Policy Research Network 165804, Canadian Agricultural Trade Policy Research Network.
    4. Elskamp, Rebecca & Hailu, Getu, 2013. "Do Efficient Dairy Producers Purchase Quota?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 149678, Agricultural and Applied Economics Association.
    5. Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, Elsevier, vol. 25(1), pages 1-16, February.
    6. Shrestha, Shailesh & Hennessy, Thia C., 2008. "A prospect of moving towards free milk quota market in Ireland – will milk quota movement follow efficiency?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 43657, European Association of Agricultural Economists.
    7. D Colman & M Burton & D Rigby & J Franks, 2001. "Structural Change and Policy Reform in the UK Dairy Sector," The School of Economics Discussion Paper Series, Economics, The University of Manchester 0117, Economics, The University of Manchester.
    8. Fezzi, Carlo & Bateman, Ian J., 2009. "Structural Agricultural Land Use Modelling," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 51423, International Association of Agricultural Economists.
    9. Bezlepkina, Irina V. & Oude Lansink, Alfons G.J.M. & Oskam, Arie J., 2001. "Farm Firm Micro-Econometric Modelling:Empirical Evidence From Russian Dairy Farming," 2001 Annual meeting, August 5-8, Chicago, IL, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 20464, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Feinerman, Eli & Peerlings, Jack H.M., 2002. "Uncertain Land Availability and Perceived Biases in Investment Decisions: The Case of Dutch Dairy Farms," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain, European Association of Agricultural Economists 24949, European Association of Agricultural Economists.
    11. Wieck, Christine & Heckelei, Thomas, 2004. "Development Of Marginal Cost Distributions In Dairy Production Regions Of The Eu," 2004 Annual meeting, August 1-4, Denver, CO, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19943, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Gardebroek, Cornelis & Oude Lansink, Alfons G.J.M., 2008. "Dynamic Microeconometric Approaches To Analysing Agricultural Policy," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain, European Association of Agricultural Economists 6592, European Association of Agricultural Economists.
    13. Sckokai, Paolo, 2001. "The Common Agricultural Policy In Econometric Models," Working Papers, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE 14800, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE.

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