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Welfare Measurement and Quality Product Differentiation in Agriculture: An Example from the EU 15 Beef Sector

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  • Maria Priscila Ramos
  • Sophie Drogué
  • Stephan Marette

Abstract

This paper examines the impact of two different model specifications on welfare estimations. A model specification that takes into account product differentiation is compared to a specification where the product differentiation is overlooked. The welfare comparison under both specifications show ambiguous results: the welfare under one specification may be larger or lower than the welfare under the alternative assumption. In order to illustrate our theoretical conclusions, we present an application to the EU15 beef market. We show that the welfare when the product differentiation is taken into account by the econometric estimation is lower than the welfare when the product differentiation is overlooked.

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Bibliographic Info

Paper provided by INRA, Economie Publique in its series Working Papers with number 2005/02.

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Date of creation: 01 Feb 2005
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Handle: RePEc:apu:wpaper:2005/02

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Keywords: Product differentiation; Beef demand; European Union; Welfare;

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  1. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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