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Welfare Measurement Biases and Product Differentiation in Agriculture: An Example from the US 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 some biases of aggregation as well as 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 US beef market. We show that the welfare, when the product differentiation is taken into account, is smaller than the welfare when the product differentiation is omitted.

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File URL: https://www6.versailles-grignon.inra.fr/economie_publique/Media/fichiers/Working-Papers/Working-Papers-2006/WP_2006_02
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Bibliographic Info

Paper provided by INRA, Economie Publique in its series Working Papers with number 2006/02.

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Date of creation: 01 Feb 2006
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Handle: RePEc:apu:wpaper:2006/02

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Related research

Keywords: Product differentiation; Beef demand; Welfare;

References

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  1. Rickertsen, Kyrre, 1996. "Structural Change and the Demand for Meat and Fish in Norway," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 23(3), pages 316-30.
  2. James, Jennifer S. & Alston, Julian M., 2002. "Taxes and quality: A market-level analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), September.
  3. Gracia, A. & Albisu, L. M., 1998. "The demand for meat and fish in Spain: Urban and rural areas," Agricultural Economics, Blackwell, vol. 19(3), pages 359-366, December.
  4. Van Eenoo, Edward, Jr. & Peterson, Everett B. & Purcell, Wayne D., 2000. "Impact Of Exports On The U.S. Beef Industry," 2000 Conference, April 17-18 2000, Chicago, Illinois 18923, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  5. Abigail Tiffin & Richard Tiffin, 1999. "Estimates of Food Demand Elasticities for Great Britain: 1972-1994," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 140-147.
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