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Flexible quota constraints in positive mathematical programming models

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  • Buysse, Jeroen
  • Van der Straeten, Bart
  • Claeys, Dakerlia
  • Lauwers, Ludwig H.
  • Marchand, Fleur L.
  • Van Huylenbroeck, Guido
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    Abstract

    To explain over- and underuse of available quota, Buysse et al. (2007) have integrated the shadow cost of the quota constraint in a quota flexibility function in a positive mathematical programming model. This method and central hypothesis, formulated and tested for the case of Belgian sugar beet farms, is in current paper extended and confirmed for the cases of Flemish dairy quota and manure emission rights. Despite the different organisation, objectives and implementations of the diverse quota systems, the results are similar. A higher utilisation of quota is significantly driven by the quota rent, but farm characteristics are also important and the effect declines with increasing quota rent. Regardless the quota, the dairy quota flexibility behaviour of the sample of Flemish farms results in an output price elasticity of 0.6%. The quota flexibility functions can be used for policy analysis, model sophistication and farm advisory instrument.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 107th Seminar, January 30-February 1, 2008, Sevilla, Spain with number 6640.

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    Date of creation: 2008
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    Handle: RePEc:ags:eaa107:6640

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    Related research

    Keywords: Quota; flexibility; Positive Mathematical Programming; farm model; Common Agricultural Policy; Agricultural and Food Policy; Demand and Price Analysis; Research Methods/ Statistical Methods;

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    1. Jeroen Buysse & Bruno Fernagut & Olivier Harmignie & Bruno Henry de Frahan & Ludwig Lauwers & Philippe Polomé & Guido Van Huylenbroeck & Jef Van Meensel, 2007. "Farm-based modelling of the EU sugar reform: impact on Belgian sugar beet suppliers," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 34(1), pages 21-52, March.
    2. Thomas Heckelei & Hendrik Wolff, 2003. "Estimation of constrained optimisation models for agricultural supply analysis based on generalised maximum entropy," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 27-50, March.
    3. Luhandjula, M.K., 2006. "Fuzzy stochastic linear programming: Survey and future research directions," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1353-1367, November.
    4. Rommelfanger, Heinrich, 1996. "Fuzzy linear programming and applications," European Journal of Operational Research, Elsevier, vol. 92(3), pages 512-527, August.
    5. Markus Lips & Peter Rieder, 2005. "Abolition of Raw Milk Quota in the European Union: A CGE Analysis at the Member Country Level," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 1-17.
    6. Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, vol. 25(1), pages 1-16, February.
    7. Alexandre Gohin & Jean-Christophe Bureau, 2006. "Modelling the EU sugar supply to assess sectoral policy reforms," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(2), pages 223-247, June.
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    Citations

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    Cited by:
    1. der Straeten, Bart Van & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Markets of concentration permits: The case of manure policy," Ecological Economics, Elsevier, vol. 70(11), pages 2098-2104, September.
    2. Van der Straeten, Bart & Buysse, Jeroen & Nolte, Stephan & Marchand, Fleur L. & Lauwers, Ludwig H. & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2008. "A Farm Level Analysis Of The Relation Between Cap Reforms And Local Environmental Legislations: How And In Which Extent Flemish Dairy Farmers Can Fill Up Extra Milk Quota?," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44846, European Association of Agricultural Economists.

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