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Partial Market Liberalization and the Efficiency of Policy Reform: The Case of the European Dairy Sector
Author(s) -
BouamraMechemache Zohra,
Chavas JeanPaul,
Cox Thomas L.,
Réquillart Vincent
Publication year - 2002
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/1467-8276.00363
Subject(s) - liberalization , partial equilibrium , economics , international economics , market efficiency , economic efficiency , agricultural policy , free trade , agriculture , general equilibrium theory , market economy , macroeconomics , ecology , biology , financial economics
This article analyzes the efficiency of partial market liberalization and policy reform with an application to the European dairy sector. In a second best world, partial moves toward market liberalization are not always efficiency improving. We develop a general equilibrium model to investigate the efficiency implications of discrete changes in government policy. The analysis covers price and quantity instruments used in both domestic and trade policy. We derive simple cnditions under which partial market liberalization is efficiency improving. We apply the approach to agricultural policy reform in the European dairy sector and identify market liberalization scenarios that are “not” efficiency improving.