Journal
JOURNAL OF AGRICULTURAL ECONOMICS
Volume 60, Issue 2, Pages 334-347Publisher
WILEY-BLACKWELL PUBLISHING, INC
DOI: 10.1111/j.1477-9552.2008.00187.x
Keywords
Cumulative cost curves; milk quota; optimisation modelling; quota trade; C61; D21; Q12; Q12
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Funding
- Department of Agriculture, Forestry and Food Stimulus Research
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This paper estimates the inefficiencies associated with the regionalisation of the milk quota trade. An optimisation model is developed to estimate the economic value of quota. Quota values are aggregated to derive quota sale and purchase curves under two scenarios: first, where quotas can be traded nationally and second, where the trade of quota is regionally restricted. Quota trade is simulated and the consequent effects on supplier structure estimated. Through the derivation of sectoral cumulative cost curves it is possible to estimate the impact of regionalising quota trade on sector efficiency. The model is solved using National Farm Survey data from Ireland and the inefficiencies of regionalised quota trade in Ireland are estimated at Euro27 million. The paper concludes by discussing the implications of restricted quota trade, especially in the context of eventual quota removal.
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