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GTAP Resources: Resource Display

GTAP Resource #5648

"Melitz Meets Milk: The Impact of Quota Abolition on EU Dairy Export Competitiveness"
by Philippidis, George and Robert Waschik


Abstract
Despite evidence to the contrary, a common feature of almost all previous studies of EU milk quota abolition is the assumption of perfect competition (PC) in the dairy industry. Employing a global computable general equilibrium framework, an imperfectly competitive (IC) model variant offers insights into structural change (i.e., scale of output, firm entry/exit) and varietal diversity in the dairy industry, whilst a heterogeneous-firm Melitz extension enriches the analysis by endogenising the decision making process of domestic firms when exporting (or not) to specific foreign markets.
The results from a PC CGE model variant are found to be consistent with respected market outlooks and official data. Furthermore, PC and IC variants generate broadly similar trends – a result corroborated in a previous study of Italian dairy. Our IC model prediction of a ‘shakeout’ in EU dairy is tentatively supported by actual observations. Finally, as an industry characterised by significant product-innovation, increased extra-EU export orientation by remaining dairy firms increases varietal choice which further boosts EU dairy exports compared with the PC model variant.


Resource Details (Export Citation) GTAP Keywords
Category: Other CGE Application
Status: Published
By/In: Journal of Agricultural Economics
Date: 2018
Version:
Created: Philippidis, G. (4/24/2018)
Updated: Batta, G. (4/24/2018)
Visits: 321
- Baseline development
- Agricultural policies
- European Union


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