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GTAP Resource #663

"Endogenous Adjustment of Quotas: The Case of Swiss Milk Production"
by Lips, Markus and Peter Rieder

This paper discusses an approach to implementing output quotas in the GTAP model is elaborated, which permits an endogenous change from a binding to a non-binding status and vice versa. The quota rent is interpreted as additional earnings ofof the factors used. The suggested approach requires noany change ofof the data base. In return, several modifications of the GTAP standard model are required: a quota condition is introduced and the zero profit condition is replaced. Furthermore, the equation of the regional income is expanded by changing the quota rent and employing a necessary correction term.
To illustrate this approach the potential impact of a total elimination of Swiss export subsidies is analyzed. A result of this would be that Swiss raw milk production would no longer attain its quota quantity and the loss of the quota rent would reduce the Swiss raw milk price remarkably.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
2001 Conference Paper
Status: Published
By/In: Presented at the 4th Annual Conference on Global Economic Analysis, Purdue University, USA
Date: 2001
Created: (5/30/2001)
Updated: Bacou, M. (7/26/2001)
Visits: 2,476
No keywords have been specified.

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