Publication Date:
2011-12-27
Description:
We apply a spatial price equilibrium model of the world sugar market to simulate an abolition of the European Union (EU) quota system in 2015/16. To overcome the normative nature of the approach, we calibrate the model by attaching a non-linear cost term to each trade flow. This is in some regards similar to positive mathematical programming. We suggest an economic interpretation and an econometric specification of the cost term. EU sugar production is simulated to increase from 13.3 to 15.5 million tons in case of quota abolition by 2019/20. Ten member states increase production, nine reduce it. Preferential imports are significantly reduced. Simulated effects are found to be more pronounced the higher the world market price.
Keywords:
F11 - Neoclassical Models of Trade, F17 - Trade Forecasting and Simulation, Q17 - Agriculture in International Trade, Q18 - Agricultural Policy
;
Food Policy
Print ISSN:
0165-1587
Electronic ISSN:
1464-3618
Topics:
Agriculture, Forestry, Horticulture, Fishery, Domestic Science, Nutrition
,
Economics
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