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© 1994 Oxford University Press and the Foundation for the European Review of Agricultural Economics

research-article

Measures of distorting support in the context of production quotas

HERVÉ GUYOMARD, LOUIS-PASCAL MAHÉ, EMSAR and INRA-ESR

Herv{acute} Guyomard and Louis Mahé ENSAR and INRA-ESR 65, ruede Saint-Brieuc 35042 Rennes Cedex France

Received September 1, 1993;

Summary

This paper provides a general framework for measuring farm support when both price and quantity policy instruments are used jointly. It is based on duality theory in production, i.e., on profit functions corresponding to different (dis-)equilibrium situations. Total Support is decomposed into a Neutral component and a Distorting part related to shadow prices of fixed quantities. An application to the reduction in support to the EC farm sector from 1986 to 1988 suggests that the EC could claim an extra 4.4 billion ECU of ‘credit’ if the Distorting concept had been used in the GATT. Limitations of quotas as second-best policies are pointed out

Keywords: producer surplus, producer subsidy equivalent, global measure of support, production theory, rationing


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