The economic cost of the CAP revisited Report as inadecuate




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This paper reports estimates of the domestic economic cost of the common agricultural policy (CAP) from computablegeneral equilibrium simulations which incorporate imperfect competition in the non-primary sectors, as well as explicitmodelling of agricultural protection. Imperfect competition is characterised to include hierarchical preferences, addressingthe notion of varietal diversity as an important decision variable in consumer behaviour. Results indicate that repeal of theCAP would reduce varietal diversity in food processing in the EU, causing utility losses. However, these would be counteredby positive varietal effects in other sectors and by strong allocative effects. The net cost of the CAP to the EU is estimated at0.2% of gross domestic product (GDP). For an individual member state the cost can be considerably larger, as with the UKwhere the estimate is above 0.5% of GDP. © 2001 Elsevier Science B.V. All rights reserved.

Subject(s): Agricultural and Food Policy

Production Economics

Issue Date: 2001-09

Publication Type: Journal Article

PURL Identifier: http://purl.umn.edu/177378 Published in: Agricultural Economics: The Journal of the International Association of Agricultural Economists, Volume 25, Issue 2-3 Page range: 375-385

Total Pages: 12

JEL Codes: Dl2; D58; Fl2; Ql8

Record appears in: International Association of Agricultural Economists (IAAE) > Agricultural Economics: The Journal of the International Association of Agricultural Economists





Author: Philippidis, G. ; Hubbard, L.J.

Source: http://ageconsearch.umn.edu/record/177378?ln=en



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