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The 'Milk Quotas Rent Puzzle' In The Eu: Economic Significance, Review, And Policy Relevance

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  • Jongeneel, Roelof A.
  • Tonini, Axel

Abstract

In the so-called Common Agricultural Policy (CAP) 'Health Check' the European Commission has recently proposed gradual transitional measures to allow a 'soft landing' of the milk sector to quota expiry. The aim of this paper is to support policy makers to get better insights in the implications of some of the most important economic assumptions and empirical choices made in partial equilibrium models focusing on dairy. Three partial equilibrium models are considered: the Agricultural Member states MODeling (AGMEMOD) model, the Common Agricultural Policy SIMulation (CAPSIM) model, and the European Dairy Industry Model (EDIM). The paper analyzes how the most important economic supply components, as they are part of the three key dairy models, affect milk production projections. A main conclusion is that the evaluation of the contribution of a study should not be based on one single characteristic (such as quota rents, supply responses). One isolated characteristic is not able to explain finally obtained model outcomes. Quota rents, supply responses, shifters and the demand side have to be integrated with each other.

Suggested Citation

  • Jongeneel, Roelof A. & Tonini, Axel, 2008. "The 'Milk Quotas Rent Puzzle' In The Eu: Economic Significance, Review, And Policy Relevance," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44796, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa109:44796
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    File URL: http://purl.umn.edu/44796
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    Keywords

    milk quota rents; supply response; shifters; dairy policy; equilibrium models.; Agricultural and Food Policy; Political Economy; Research Methods/ Statistical Methods; C01; C02; Q12; Q13.;

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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