Price Policies and the Domestic and International Distribution of Commodity Quality
Most studies of agricultural commodity price policies ignore quality responses.1 Typically, it is assumed that the commodity of interest is homogeneous, and no allowance is made for any policy-induced changes in quality or in the distribution of quality (i.e., average quality).2 This might be a good approximation in some cases. Recently, however, James (2000a) reported a closed-economy model of stereotypical domestic agricultural commodity policies, in which she found that quality responses might be significant and could substantially alter the welfare implications of policy alternatives.3 In this chapter, we adopt the same general approach, and adapt and extend it to evaluate the quality impacts of both domestic and border policies applied to agricultural commodities in an open-economy setting.
KeywordsEuropean Union Average Quality Export Subsidy Import Tariff Agric Econ
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