Abstract
Production rights mobility in the European Union. Implications of a milk quota market defined at region, country or Community level. The duality theory framework and the concept of virtual price associated with a rationed good are used to analyse producer behaviour under output quota and to derive a formal model of tradable quota rights. The empirical application is based on a sample of dairy farms from the European RICA for the year 1991. The quota market is defined at various geographical levels corresponding to the region, the country or the Community. Policy implications are then discussed. In particular, we show that transaction costs on the quota market and positive or negative externalities due to farming are important considerations to take into account for defining an efficient quota transfer policy.
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